Decreasing the nation’s dependence on harmful gas emitting fossil fuels doesn’t come cheap, but improved technologies combined with government and utility incentive programs continue to make renewable sources of energy more affordable. Renewable energy sources such as water, wind, geothermal, biofuels and the sun accounted for around 10 percent of the electricity generated in the United States in 2009, according to the US Energy Information Administration (EIA).
Renewable Energy Source Business Models
Renewable energy systems typically require a substantial initial investment, although business models such as solar leasing programs make it possible for home and business owners to use solar energy to power buildings with little or no upfront cost. Owners of renewable energy systems recoup their investment through monthly savings on energy bills, though rebates and tax credits and by sending surplus electricity back into conventional power grids. Once the initial system installation costs are recovered, the power generated by renewable energy systems is free, resulting in significant savings over the long term.
Renewable and Conventional Energy Cost Comparisons
Determining whether or not a renewable energy source is cost-efficient not only requires a calculation of system savings over the long term, but requires comparisons with the real costs of conventional energy systems. Conventional energy sources like coal may be cheaper materials, but as they can negatively impact the environment, their long-term cost can be far more extensive. Additionally, while the costs for renewable energy continues to decline, conventional energy costs are rising.
Other conventional energy costs are even more challenging to calculate. According to the EIA, in 2010, the United States imported around half of the petroleum products that the nation uses. Relying on outside sources to meet the nation’s energy needs has political, economical and environmental consequences. Using local conventional energy sources can have unforeseen cost consequences as well, as evidenced by the recent oil spill in the Gulf Coast.
Solar Hot Water Systems
For home and business owners, solar hot water systems are among the most affordable renewable energy products. A solar collector that is fitted onto the roof of a building heats water that is then siphoned into a hot water tank inside the structure. Solar hot water systems are typically used to augment existing systems, saving money by pre-warming the water. A solar water heating system is a cheap and easy technology to install, with an ROI period that is typically less than five years.
Of the greenhouse gases that are emitted in the United States each year, 87 percent are related to the consumption of conventional energy. Concerns about climate change, rising oil prices and national security must be taken into account in any analysis of the cost of renewable energy.