Put simply, renewable energies are at least as cheap as their fossil fuel alternatives. Here’s why.
The cost of electricity is measured in cents ($) per kilowatt hour (kWh). This is calculated using a system called the levelized cost of electricity (LCOE) which accounts for factors such as capital costs, fuel costs, and maintenance, to create comparable figures.
The LCOE includes an assumed utilization rate that allows for intermittent renewable supplies. Critics say that the LCOE doesn’t account for additional costs associated with renewables. But the opposite is true.
LCOE skews estimates in favour of fossil fuels and disguises many of their implications. Illness and mortality due to pollution, environmental monitoring and clean up, and infrastructure damage, all cost the state as a direct result of fossil fuels. We call these costs: externalities.
Externalities make gas more expensive than onshore wind, geothermal, biomass, and hydroelectricity. The fact that fossil fuels are more expensive than renewables is disguised because externality costs of fossil fuels are hidden in ordinary price comparisons. Renewables are not an expense but a saving, a figure that could run into the hundreds of billions.
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