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| | = Overview = | | = Overview = |
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| − | In order to assess how [[Portal:Financing and Funding|private investment]] in <span data-scaytid="2" data-scayt_word="renewables">renewables</span> can be increased, it is necessary to understand the economics of renewable energy. | + | In order to assess how [[Portal:Financing and Funding|private investment]] in <span data-scaytid="280" data-scayt_word="renewables">renewables</span> can be increased, it is necessary to understand the economics of renewable energy. |
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| − | == Rationale for <span data-scaytid="9" data-scayt_word="Renewables">Renewables</span> == | + | == Rationale for <span data-scaytid="293" data-scayt_word="Renewables">Renewables</span> == |
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| − | Worldwide more energy is required to enable economic development. Fossil fuels are a finite resource that contribute to climate change and cause other problems like smog, extended supply lines and vulnerable power grids. Utilizing <span data-scaytid="3" data-scayt_word="renewables">renewables</span> would help to avoid these problems, create new job opportunities and reduce the drain on hard currency for poorer countries. Because conventional fuels have received long-term subsidies in the past, it is vital that governments support the development of <span data-scaytid="4" data-scayt_word="renewables">renewables</span> in the form of financial incentives that can create a level playing field <ref name="United Nations Environment Programme Finance Initiative (UNEP FI), 2004. CEO briefing - Renewable Energy, Geneva, Switzerland: United Nations Environment Programme Finance Initiative (UNEP FI).">United Nations Environment Programme Finance Initiative (UNEP FI), 2004. CEO briefing - Renewable Energy, Geneva, Switzerland: United Nations Environment Programme Finance Initiative (UNEP FI).</ref>. | + | Worldwide more energy is required to enable economic development. Fossil fuels are a finite resource that contribute to climate change and cause other problems like smog, extended supply lines and vulnerable power grids. Utilizing <span data-scaytid="281" data-scayt_word="renewables">renewables</span> would help to avoid these problems, create new job opportunities and reduce the drain on hard currency for poorer countries. Because conventional fuels have received long-term subsidies in the past, it is vital that governments support the development of <span data-scaytid="282" data-scayt_word="renewables">renewables</span> in the form of financial incentives that can create a level playing field <ref name="United Nations Environment Programme Finance Initiative (UNEP FI), 2004. CEO briefing - Renewable Energy, Geneva, Switzerland: United Nations Environment Programme Finance Initiative (UNEP FI).">United Nations Environment Programme Finance Initiative (UNEP FI), 2004. CEO briefing - Renewable Energy, Geneva, Switzerland: United Nations Environment Programme Finance Initiative (UNEP FI).</ref>. |
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| | [[File:Economics of RE 1.PNG|thumb|right|300px|Investments in Renewables in 2012. Source: Frankfurt School UNEP Collaborating Centre for Climate & Sustainable Energy Finance]] | | [[File:Economics of RE 1.PNG|thumb|right|300px|Investments in Renewables in 2012. Source: Frankfurt School UNEP Collaborating Centre for Climate & Sustainable Energy Finance]] |
| | <div></div> | | <div></div> |
| − | According to [http://www.ren21.net/REN21Activities/GlobalFuturesReport.aspx REN-21’s Renewables Global Futures Report 2013], the future of renewable energy is uncertain as finance remains a key challenge. The future of the <span data-scaytid="6" data-scayt_word="renewables">renewables</span> industry depends on finance, risk-return profiles, business models, investment lifetimes and a host of other economic, policy and social factors. Many new [[Portal:Financing and Funding|sources of finance]] are possible such as insurance funds, pension funds and sovereign wealth funds along with new mechanisms for financial risk mitigation. Many new business models are also possible for local energy services, utility services, transport, community and cooperative ownership, and rural energy services <ref name="Appleyard, D., March 2013. The Future of Renewables: Economic, Policy and Social Impications - Renewable Energy World International. Available at: http://www.renewableenergyworld.com/rea/news/article/2013/03/from-the-editor20">Appleyard, D., March 2013. The Future of Renewables: Economic, Policy and Social Impications - Renewable Energy World International. Available at: http://www.renewableenergyworld.com/rea/news/article/2013/03/from-the-editor20</ref>. | + | According to [http://www.ren21.net/REN21Activities/GlobalFuturesReport.aspx REN-21’s Renewables Global Futures Report 2013], the future of renewable energy is uncertain as finance remains a key challenge. The future of the <span data-scaytid="283" data-scayt_word="renewables">renewables</span> industry depends on finance, risk-return profiles, business models, investment lifetimes and a host of other economic, policy and social factors. Many new [[Portal:Financing and Funding|sources of finance]] are possible such as insurance funds, pension funds and sovereign wealth funds along with new mechanisms for financial risk mitigation. Many new business models are also possible for local energy services, utility services, transport, community and cooperative ownership, and rural energy services <ref name="Appleyard, D., March 2013. The Future of Renewables: Economic, Policy and Social Impications - Renewable Energy World International. Available at: http://www.renewableenergyworld.com/rea/news/article/2013/03/from-the-editor20">Appleyard, D., March 2013. The Future of Renewables: Economic, Policy and Social Impications - Renewable Energy World International. Available at: http://www.renewableenergyworld.com/rea/news/article/2013/03/from-the-editor20</ref>. |
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| | In 2011, the global investment in renewable power and fuels increased by 17% to a new record of $257 billion dollars. Significantly, developing economies made up 35% of this total investment <ref name="Frankfurt School UNEP Collaborating Centre for Climate & Sustainable Energy Finance, 2012. Global Trends in Renewable Energy Investment 2012, Frankfurt am Main, Germany: Frankfurt School UNEP Collaborating Centre for Climate & Sustainable Energy Finance.">Frankfurt School UNEP Collaborating Centre for Climate & Sustainable Energy Finance, 2012. Global Trends in Renewable Energy Investment 2012, Frankfurt am Main, Germany: Frankfurt School UNEP Collaborating Centre for Climate & Sustainable Energy Finance.</ref>. | | In 2011, the global investment in renewable power and fuels increased by 17% to a new record of $257 billion dollars. Significantly, developing economies made up 35% of this total investment <ref name="Frankfurt School UNEP Collaborating Centre for Climate & Sustainable Energy Finance, 2012. Global Trends in Renewable Energy Investment 2012, Frankfurt am Main, Germany: Frankfurt School UNEP Collaborating Centre for Climate & Sustainable Energy Finance.">Frankfurt School UNEP Collaborating Centre for Climate & Sustainable Energy Finance, 2012. Global Trends in Renewable Energy Investment 2012, Frankfurt am Main, Germany: Frankfurt School UNEP Collaborating Centre for Climate & Sustainable Energy Finance.</ref>. |
| | <div> | | <div> |
| − | Despite these trends, renewable energy technologies (<span data-scaytid="15" data-scayt_word="RETs">RETs</span>) continue to face a number of barriers <ref>These barriers can be financial and economically such as, higher upfront costs, political and regulatory (generally policies do not favour renewable technologies), environmental and social (e.g. planning objections), technical (e.g. intermittent nature of renewable technologies), or related to the scale of the projects, mainly higher transaction costs. To create a level playing field for renewable technologies, all the barriers mentioned above need to be addressed, but the crucial starting point is a supportive and stable policy and regulatory framework. This will encourage greater investment on the part of financial institutions. (United Nations Environment Programme Finance Initiative (UNEP FI), 2004)</ref><span style="line-height: 1.5em; font-size: 0.85em;">. (See [[Barriers_for_Renewable_Energy_Financing|Barriers for Renewable Energy Financing]])</span> | + | Despite these trends, renewable energy technologies (<span data-scaytid="1" data-scayt_word="RETs">RETs</span>) continue to face a number of '''[https://energypedia.info/Barriers_for_Renewable_Energy_Financing barriers] '''including: |
| | + | *Financial and economic barriers such as higher upfront costs |
| | + | *Political and regulatory barriers due to policies generally not favoring renewable technologies |
| | + | *Environmental and social barriers like planning objections |
| | + | *Technical barriers such as the intermittent nature of renewable technologies, issues related to the scale of the project and higher transaction costs. |
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| | When assessing decisions to support RET’s, policy-makers need answers to the following questions:<br/> | | When assessing decisions to support RET’s, policy-makers need answers to the following questions:<br/> |
| − | #Are <span data-scaytid="7" data-scayt_word="renewables">renewables</span> more expensive that fossil fuels?<br/> | + | #Are <span data-scaytid="284" data-scayt_word="renewables">renewables</span> more expensive that fossil fuels?<br/> |
| − | #Can <span data-scaytid="8" data-scayt_word="renewables">renewables</span> be made available on a scale large enough to replace fossil fuels? | + | #Can <span data-scaytid="285" data-scayt_word="renewables">renewables</span> be made available on a scale large enough to replace fossil fuels? |
| | </div> | | </div> |
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| | [[File:Economics of RE 2.PNG|thumb|right|400px|Relative costs for renewable energy technologies compared with each other, and with non-renewable energy. Source: Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011.]] | | [[File:Economics of RE 2.PNG|thumb|right|400px|Relative costs for renewable energy technologies compared with each other, and with non-renewable energy. Source: Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011.]] |
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| − | As shown in the figure, while non-renewable costs are found in the range of US$0.3–US$0.10/<span data-scaytid="19" data-scayt_word="KwH">KwH</span> (kilowatt hour), most <span data-scaytid="18" data-scayt_word="renewables">renewables</span> are '''more expensive''' and have a far '''greater cost range'''. This indicates the relative maturity of technologies and also the key significant '''cost difference of renewable energy production''' (which is dependent on factors such as wind speed and degrees of solar intensity.)<br/> | + | As shown in the figure, while non-renewable costs are found in the range of US$0.3–US$0.10/<span data-scaytid="10" data-scayt_word="KwH">KwH</span> (kilowatt hour), most <span data-scaytid="287" data-scayt_word="renewables">renewables</span> are '''more expensive''' and have a far '''greater cost range'''. This indicates the relative maturity of technologies and also the key significant '''cost difference of renewable energy production''' (which is dependent on factors such as wind speed and degrees of solar intensity.)<br/> |
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| − | '''Scale '''is also an important issue. This is due to the fact that fossil-fuel technologies have been developed, improved and manufactured on an increasing scale for a century. This is not yet the case for <span data-scaytid="21" data-scayt_word="renewables">renewables</span><ref name="Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011. Financing Renewable Energy in Developing Countries: Mechanisms and Responsibilities. Available at: http://erd-report.eu/erd/report_2011/documents/dev-11-001-11researchpapers_griffith-jones-ocampo-spratt.pdf">Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011. Financing Renewable Energy in Developing Countries: Mechanisms and Responsibilities. Available at: http://erd-report.eu/erd/report_2011/documents/dev-11-001-11researchpapers_griffith-jones-ocampo-spratt.pdf</ref><span style="line-height: 1.5em; font-size: 0.85em;">.</span> | + | '''Scale '''is also an important issue. This is due to the fact that fossil-fuel technologies have been developed, improved and manufactured on an increasing scale for a century. This is not yet the case for <span data-scaytid="288" data-scayt_word="renewables">renewables</span><ref name="Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011. Financing Renewable Energy in Developing Countries: Mechanisms and Responsibilities. Available at: http://erd-report.eu/erd/report_2011/documents/dev-11-001-11researchpapers_griffith-jones-ocampo-spratt.pdf">Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011. Financing Renewable Energy in Developing Countries: Mechanisms and Responsibilities. Available at: http://erd-report.eu/erd/report_2011/documents/dev-11-001-11researchpapers_griffith-jones-ocampo-spratt.pdf</ref><span style="line-height: 1.5em; font-size: 0.85em;">.</span> |
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| − | These factors suggest that there is scope to reduce the varying production costs of <span data-scaytid="23" data-scayt_word="renewables">renewables</span>.<span style="font-size: 0.85em; line-height: 1.5em;"></span> | + | These factors suggest that there is scope to reduce the varying production costs of <span data-scaytid="289" data-scayt_word="renewables">renewables</span>.<span style="font-size: 0.85em; line-height: 1.5em;"></span> |
| − | *The most expensive form of renewable energy is [[Portal:Hydro|ocean/tidal electricity]], which, even at the bottom of the potential cost range, remains uncompetitive with fossil fuels.<br/> | + | *The most expensive form of renewable energy is [[Portal:Hydro|ocean/tidal electricity]], which, even at the bottom of the potential cost range, remains uncompetitive with fossil fuels. |
| − | **Onshore and offshore wind and large solar photovoltaic (PV) plants today require policy support in order to bridge the gap between generation costs and the market prices of electricity. This is expected to change in the near future as [http://iea-retd.org/wp-content/uploads/2013/07/20130710-RE-COST-FINAL-REPORT.pdf reported] by the [http://iea-retd.org/ International Energy Agency's Renewable Energy Technology Deployment Group] (<span data-scaytid="1051" data-scayt_word="IEA">IEA</span>). The report finds that technology and market dynamics are driving down the costs of renewable power generation while increasing the costs involved in non-renewable generation. Thus in the near future, onshore wind and large scale PV plants could be able to offer attractive business cases to investors in regions with a high proportion of thermal generation without resorting to incentives <ref name="Bayar, T., 2013. The Cost of New Renewable Power Generation: Approaching Parity? Available at: http://www.renewableenergyworld.com/rea/news/article/2013/07/costing-renewable-power-generation?cmpid=rss">Bayar, T., 2013. The Cost of New Renewable Power Generation: Approaching Parity? Available at: http://www.renewableenergyworld.com/rea/news/article/2013/07/costing-renewable-power-generation?cmpid=rss</ref>. | + | **Onshore and offshore wind and large solar photovoltaic (PV) plants today require policy support in order to bridge the gap between generation costs and the market prices of electricity. This is expected to change in the near future as [http://iea-retd.org/wp-content/uploads/2013/07/20130710-RE-COST-FINAL-REPORT.pdf reported] by the [http://iea-retd.org/ International Energy Agency's Renewable Energy Technology Deployment Group] (<span data-scaytid="11" data-scayt_word="IEA">IEA</span>). The report finds that technology and market dynamics are driving down the costs of renewable power generation while increasing the costs involved in non-renewable generation. Thus in the near future, onshore wind and large scale PV plants could be able to offer attractive business cases to investors in regions with a high proportion of thermal generation without resorting to incentives <ref name="Bayar, T., 2013. The Cost of New Renewable Power Generation: Approaching Parity? Available at: http://www.renewableenergyworld.com/rea/news/article/2013/07/costing-renewable-power-generation?cmpid=rss">Bayar, T., 2013. The Cost of New Renewable Power Generation: Approaching Parity? Available at: http://www.renewableenergyworld.com/rea/news/article/2013/07/costing-renewable-power-generation?cmpid=rss</ref>. |
| − | *The next is [[Portal:Solar|solar power]], which at its cheapest is potentially competitive with fossil fuels. However, its midrange costs are well above fossil fuels. This wide range reflects the cost implications of different technologies. For example, large-scale '''Concentrated Solar Power (<span data-scaytid="36" data-scayt_word="CSP">CSP</span>)''' techniques employed in a desert environment could produce electricity at a far lower cost than small solar panels fitted to residential properties.<br/> | + | *The next is [[Portal:Solar|solar power]], which at its cheapest is potentially competitive with fossil fuels. However, its midrange costs are well above fossil fuels. This wide range reflects the cost implications of different technologies. For example, large-scale '''Concentrated Solar Power (<span data-scaytid="12" data-scayt_word="CSP">CSP</span>)''' techniques employed in a desert environment could produce electricity at a far lower cost than small solar panels fitted to residential properties.<br/> |
| | *[[Portal:Wind|Wind power]] can be cheaper, but remains more expensive than fossil fuels in most instances. This range reflects differing scales of energy generation, but also the different cost structures of onshore and offshore wind.<br/> | | *[[Portal:Wind|Wind power]] can be cheaper, but remains more expensive than fossil fuels in most instances. This range reflects differing scales of energy generation, but also the different cost structures of onshore and offshore wind.<br/> |
| | *[[Portal:Bioenergy|Biomass]], [[Geothermal Energy|geothermal]] and [[Portal:Hydro|hydropower]] in particular are already competitive with fossil fuels in some circumstances <ref name="Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011. Financing Renewable Energy in Developing Countries: Mechanisms and Responsibilities. Available at: http://erd-report.eu/erd/report_2011/documents/dev-11-001-11researchpapers_griffith-jones-ocampo-spratt.pdf">Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011. Financing Renewable Energy in Developing Countries: Mechanisms and Responsibilities. Available at: http://erd-report.eu/erd/report_2011/documents/dev-11-001-11researchpapers_griffith-jones-ocampo-spratt.pdf</ref>. | | *[[Portal:Bioenergy|Biomass]], [[Geothermal Energy|geothermal]] and [[Portal:Hydro|hydropower]] in particular are already competitive with fossil fuels in some circumstances <ref name="Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011. Financing Renewable Energy in Developing Countries: Mechanisms and Responsibilities. Available at: http://erd-report.eu/erd/report_2011/documents/dev-11-001-11researchpapers_griffith-jones-ocampo-spratt.pdf">Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011. Financing Renewable Energy in Developing Countries: Mechanisms and Responsibilities. Available at: http://erd-report.eu/erd/report_2011/documents/dev-11-001-11researchpapers_griffith-jones-ocampo-spratt.pdf</ref>. |
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| − | The International Energy Agency's (<span data-scaytid="1052" data-scayt_word="IEA">IEA</span>) [http://iea-retd.org/ Renewable Energy Technology Deployment Group] reports that generation costs for renewable power are also falling and approaching the costs for gas and coal fired plants, especially when the hidden subsidies that thermal generation plants receive is taken out of the equation. | + | The International Energy Agency's (<span data-scaytid="134" data-scayt_word="IEA">IEA</span>) [http://iea-retd.org/ Renewable Energy Technology Deployment Group] reports that generation costs for renewable power are also falling and approaching the costs for gas and coal fired plants, especially when the hidden subsidies that thermal generation plants receive is taken out of the equation. |
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| − | On the other hand, the cost of gas and coal fired plants is increasing because they are being used less, largely due to policy support for <span data-scaytid="940" data-scayt_word="renewables">renewables</span> construction delays, higher financing rates, and the increasing cost of fuel in some European countries and in Japan. | + | On the other hand, the cost of gas and coal fired plants is increasing because they are being used less, largely due to policy support for <span data-scaytid="290" data-scayt_word="renewables">renewables</span> construction delays, higher financing rates, and the increasing cost of fuel in some European countries and in Japan. |
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| | Crucially, the higher capital costs involved in some new-build thermal plants due to emission reduction systems will be positively or negatively influenced by the shape and provisions of future policies for emission control<ref name="Bayar, T., 2013. The Cost of New Renewable Power Generation: Approaching Parity? Available at: http://www.renewableenergyworld.com/rea/news/article/2013/07/costing-renewable-power-generation?cmpid=rss">Bayar, T., 2013. The Cost of New Renewable Power Generation: Approaching Parity? Available at: http://www.renewableenergyworld.com/rea/news/article/2013/07/costing-renewable-power-generation?cmpid=rss</ref><span style="line-height: 1.5em; font-size: 0.85em;">.</span> | | Crucially, the higher capital costs involved in some new-build thermal plants due to emission reduction systems will be positively or negatively influenced by the shape and provisions of future policies for emission control<ref name="Bayar, T., 2013. The Cost of New Renewable Power Generation: Approaching Parity? Available at: http://www.renewableenergyworld.com/rea/news/article/2013/07/costing-renewable-power-generation?cmpid=rss">Bayar, T., 2013. The Cost of New Renewable Power Generation: Approaching Parity? Available at: http://www.renewableenergyworld.com/rea/news/article/2013/07/costing-renewable-power-generation?cmpid=rss</ref><span style="line-height: 1.5em; font-size: 0.85em;">.</span> |
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| | = <span style="font-size: 22px; line-height: 30px;">Increasing the Use of Renewable Energy</span> = | | = <span style="font-size: 22px; line-height: 30px;">Increasing the Use of Renewable Energy</span> = |
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| − | There is significant scope to increase the use of <span data-scaytid="39" data-scayt_word="renewables">renewables</span> especially in developing countries. However, this potential is not limitless. Although it can be expected that the costs of <span data-scaytid="40" data-scayt_word="renewables">renewables</span> will continue to fall relative to fossil fuels, (especially in countries with high renewable energy potential), fossil fuels will probably retain a cost advantage<ref name="Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011. Financing Renewable Energy in Developing Countries: Mechanisms and Responsibilities. Available at: http://erd-report.eu/erd/report_2011/documents/dev-11-001-11researchpapers_griffith-jones-ocampo-spratt.pdf">Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011. Financing Renewable Energy in Developing Countries: Mechanisms and Responsibilities. Available at: http://erd-report.eu/erd/report_2011/documents/dev-11-001-11researchpapers_griffith-jones-ocampo-spratt.pdf</ref><span style="line-height: 1.5em; font-size: 0.85em;">.</span> | + | There is significant scope to increase the use of <span data-scaytid="291" data-scayt_word="renewables">renewables</span> especially in developing countries. However, this potential is not limitless. Although it can be expected that the costs of <span data-scaytid="292" data-scayt_word="renewables">renewables</span> will continue to fall relative to fossil fuels, (especially in countries with high renewable energy potential), fossil fuels will probably retain a cost advantage<ref name="Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011. Financing Renewable Energy in Developing Countries: Mechanisms and Responsibilities. Available at: http://erd-report.eu/erd/report_2011/documents/dev-11-001-11researchpapers_griffith-jones-ocampo-spratt.pdf">Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011. Financing Renewable Energy in Developing Countries: Mechanisms and Responsibilities. Available at: http://erd-report.eu/erd/report_2011/documents/dev-11-001-11researchpapers_griffith-jones-ocampo-spratt.pdf</ref><span style="line-height: 1.5em; font-size: 0.85em;">.</span> |
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| − | The <span data-scaytid="1050" data-scayt_word="IEA">IEA</span> in a recent [http://iea-retd.org/wp-content/uploads/2013/07/20130710-RE-COST-FINAL-REPORT.pdf report] concluded that there is no unique costs of renewable or non-renewable power generation. Cost ranges associated with any power generation are relatively large and highly dependent on the regulatory and market contexts. | + | The <span data-scaytid="247" data-scayt_word="IEA">IEA</span> in a recent [http://iea-retd.org/wp-content/uploads/2013/07/20130710-RE-COST-FINAL-REPORT.pdf report] concluded that there is no unique costs of renewable or non-renewable power generation. Cost ranges associated with any power generation are relatively large and highly dependent on the regulatory and market contexts. |
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| − | The report stressed the necessity of maintaining current incentives in order to provide business cases that can interest investors as generally the costs of both new renewable power plants and new-non-renewable generation are higher than the market price of electricity. | + | The report stressed the necessity of maintaining current incentives in order to provide business cases that can interest investors as generally the costs of both new renewable power plants and new-non-renewable generation are higher than the market price of electricity. |
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| − | [[Category:Financing_and_Funding]]
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| − | [[Category:Wind_Energy]]
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| − | [[Category:Solar]]
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| − | [[Category:Hydro]]
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| − | [[Category:Geothermal]]
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| − | [[Category:Bioenergy]]
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| | [[Category:Biomass]] | | [[Category:Biomass]] |
| | + | [[Category:Bioenergy]] |
| | + | [[Category:Geothermal]] |
| | + | [[Category:Hydro]] |
| | + | [[Category:Solar]] |
| | + | [[Category:Wind_Energy]] |
| | + | [[Category:Financing_and_Funding]] |
Worldwide more energy is required to enable economic development. Fossil fuels are a finite resource that contribute to climate change and cause other problems like smog, extended supply lines and vulnerable power grids. Utilizing renewables would help to avoid these problems, create new job opportunities and reduce the drain on hard currency for poorer countries. Because conventional fuels have received long-term subsidies in the past, it is vital that governments support the development of renewables in the form of financial incentives that can create a level playing field [1].
In 2011, the global investment in renewable power and fuels increased by 17% to a new record of $257 billion dollars. Significantly, developing economies made up 35% of this total investment [3].
Generally the economics of renewable energy are not competitive, as production costs per unit of energy are usually higher than those for fossil fuels as depicted in the figure below, which shows the relative costs for renewable energy technologies compared with each other, and with non-renewable energy[4].
As shown in the figure, while non-renewable costs are found in the range of US$0.3–US$0.10/KwH (kilowatt hour), most renewables are more expensive and have a far greater cost range. This indicates the relative maturity of technologies and also the key significant cost difference of renewable energy production (which is dependent on factors such as wind speed and degrees of solar intensity.)
These factors suggest that there is scope to reduce the varying production costs of renewables.
On the other hand, the cost of gas and coal fired plants is increasing because they are being used less, largely due to policy support for renewables construction delays, higher financing rates, and the increasing cost of fuel in some European countries and in Japan.
Crucially, the higher capital costs involved in some new-build thermal plants due to emission reduction systems will be positively or negatively influenced by the shape and provisions of future policies for emission control[5].
It is significant that much of the global solar power is concentrated in developing countries, although other areas also have a high potential.
