Higher initial costs for renewables electricity : emission , water and job-creation benefits offset the higher costs

Abstract

The environmental consequences and depleting trends of fossil fuel reserves has made an earnest requirement of wider dissemination of renewable energy resources for power generation. Energy costs from renewables are generally higher due to their high initial capital investments. Wind and solar are the two major renewable energy resources accounted for 65% of the global total electricity generated from renewables (excluding hydro). Despite these two renewable energy resources are relatively evenly distributed over the world and have capabilities to counteract environmental challenges, their commercial deployment is limited due to the lack of inclusion of their indirect benefits. This study examines three major indirect benefits from the solar and wind based electricity, i.e. emissions, water saving and job creation benefits and figures out how these benefits offset their higher cost per unit of electricity. We have found that solar and wind electricity create these benefits in the range of 930-950 gCO2e/kWh, 0.80-3.12 L/kWh, and 0.10-1.21 person-years/GWh in compare to most common fossil fuel (coal). While valuing these benefits, an emission saving of 925 gCO2e/kWh, for example, could offset 2.6 US¢/kWh of electricity price for an emission pricing of 40 US$/tonne. Water and job creation benefits also offset further costs.