Money myth Renewable energy is more expensive than thermal power

Current renewable energy is only more expensive than thermal (nuclear and fossil) generation if the environmental and social impacts, the 'externalities', are not priced. Failure to acknowledge this in some way leads to distorting policy frameworks. Furthermore, renewable prices are declining and even in the most hostile markets they will continue to converge in price with conventional energy sources without externality pricing.

The myth of cost efficiency is really a realm of 'double-think', the Orwellian place where a person maintains two contradictory beliefs. The acknowledgement that air-borne pollution does damage has long been driven home, as have the impacts of acid rain, ozone depletion and persistent organic pollutants. However, it is still possible for society, industry and governments to know this and yet ignore the social and environmental damage in the cost assessment. Not only is it still possible, the practice is almost universal in the energy sector.

Until polluters are required to avoid or compensate for the secondary effects of their business, business planners will not consider these costs on their balance sheet. However, once legislative controls are in place, the financial impacts of the former externalities are acknowledged, and business planners are forced to factor

Source: European Extern E project, as presented in EWEA (2004)

Figure 2.5 The external costs of thermal power generation in the EU

Source: European Extern E project, as presented in EWEA (2004)

Figure 2.5 The external costs of thermal power generation in the EU

them in. Thus the triple bottom line condenses into the single bottom line, which is the only aspect most investors pay attention to anyway.

Until this 'internalization' of externalities is accomplished, it is standard practice to ignore pollution. Society and the economy pick up the tab and are unwitting subsidizers of industry. The big problem for renewables, however, is that externalizing these costs causes market distortions that prevent more fully cost-effective technologies from entering the market.

Elsewhere in this book, we too will play the double-think game and refer to costs of different energy types without externality costs included, barring the occasional examination of renewables' impacts on the emerging greenhouse gas (GHG) emissions trading markets. This is to avoid confusion and also to avoid having to refer to or decide on the different estimates for externalities. However, for the record, we will lay out the best estimates of these externalized costs in Figure 2.5 and suggest the reader makes a point of adding them into any comparisons they may find themselves making.

Box 2.1 Internalizing the external costs of radioactive pigeons

The most bizarre illustration of externalized costs I ever encountered was a 1998 incident concerning pigeons and the Sellafield nuclear reprocessing facility in the UK, a plant infamous for its radioactive emissions. It appears radio-toxic emissions were gradually 'charging up' the pigeons that frequented the site to the point that they could be classified as low-level radioactive waste. What is more, these pigeons were flying around the local town dropping their own waste, also classified as low-level radioactive. And so a crack squad of radioactive pigeon catchers was set into motion and a radioactive bird poo van dispatched for washing down window sills and car bonnets. In this case, if the council paid for the clean-up van, the costs were externalized and, if the company paid, they were internalized.

Solar Panel Basics

Solar Panel Basics

Global warming is a huge problem which will significantly affect every country in the world. Many people all over the world are trying to do whatever they can to help combat the effects of global warming. One of the ways that people can fight global warming is to reduce their dependence on non-renewable energy sources like oil and petroleum based products.

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