May 15, 2021

One of the biggest obstacles involved with the transition to renewable energy is speculation about its economic impact. Some worry that switching to renewables will cause instability in the economy, leading to job losses. Many communities across the United States rely on the economic impact of producing, manufacturing or otherwise taking part in the use of hydrocarbons.

With a massive cultural and technological shift on the horizon, economic concerns are a fundamental part of the conversation.. A careful approach is necessary to avoid potential negative economic impacts. In this section, we’ll explore the economics involved with transitioning to renewable energy sources — whether it will be good or bad for the economy and the communities it might affect.

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Hydrocarbons to Renewables: A Complete Guide

Learn all about transitioning from hydrocarbons to renewables.

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1. Renewables Economics

Transitioning to renewable energy requires examining its economic impacts.

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2. Environmental Impacts

Moving from hydrocarbons to renewables will benefit the environment in many ways.

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3. Renewables Transition

Many alternative energy sources are available, each with its own pros and cons.

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4. Construction Planning

Once you’ve decided to invest in renewable energy technology, you’ll need to understand the process.

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5. Speak With the Experts

TRC can help companies navigate their transition from hydrocarbons to renewables.

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What Are the Economics of Using Renewable Energy Resources?

The economics of renewable energy technology are complex. A transition to renewable energy sources will be a cultural and economic shift, sure to have complicated effects on the economy. This inevitably puts a strain on utilities. There is an industry-wide need to improve the knowledge of operators, executives and developers. Evaluating and predicting these possible effects is an important step in the process. It’s vital to consider all conceivable possibilities and long-term impacts. Developing a complex renewable energy program requires an investment to manage the short and long-term impacts.

Some have posed concerns about the economic side effects of moving toward renewable energy. Though scientists agree a shift is necessary, it’s still essential for legislators, operators and developers to ask questions about who it will affect and how. Will working people lose their jobs? Will fossil fuel communities crumble? Will the economy fall into a recession or collapse?

Although the transition will be challenging and not everyone will see an immediate benefit, experts predict greater positive economic outcomes than negative ones. Utilities can be and many already are a part of this positive outcome. The transition will create economic growth, along with improved efficiency and resiliency. While the switch may threaten some jobs, it will also create jobs with better compensation and stronger future outlooks. In any case, switching to renewable energy is necessary for mitigating climate change and preserving ecosystems.

In many ways, transitioning to renewable energy will be good for the economy., resulting in widespread job creation as new industries emerge and expand. Some of the careers with projected growth include:

– Solar panel installers.
– Wind turbine service technicians.
– Research and development opportunities.
– Facilities construction.

These new jobs would provide opportunities for those who are vulnerable to fossil fuel-related job loss. As the fossil-fuel sector diminishes, those who work within it will have new opportunities to build careers in various renewable energy fields, often employing the same skill sets and expertise. New careers are likely to provide better pay and more chances for advancement, as well, since the renewable energy industry is on the rise.

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Do Renewable Energy Sources Rely on Subsidies?

In addition to job opportunities, another vital economic question is whether or not renewable energy markets can thrive without government intervention. Some argue renewable energy industries are only seeing success thanks to government incentive programs such as tax breaks and subsidies. They feel the lost tax revenue is not worth the benefits renewables could offer.

Others point out that subsidies have helped with the development and cost reduction of renewable energy sources. Even without subsidies, solar and wind power have become less expensive than electricity from coal, natural gas and nuclear power. While the government’s financial investment may be necessary during early development stages, existing technologies seem to do well without it.

Even as political landscapes change, alternative energy technology sources will continue to grow. With or without government incentives, renewables are a booming industry with high projected growth. Renewables will not rely on subsidies for growth and success, as some posit. However, government programs can make renewable energy projects more financially viable, mitigating project costs for individuals.

What Economic Impacts Will Renewable Energy Have?

With an energy revolution underway, it’s essential to understand the economics of the transition through a historical lens — massive-scale energy transitions have been a normal part of human society for thousands of years. Society has not always relied on the same source of energy. Popular energy sources have shifted many times throughout history as technology has advanced. Electric utility providers and industrial civilization at large have experienced energy transitions before — from biomass energy to hydropower to coal to oil and natural gas.

When early human ancestors first discovered the powers of fire, they used biomass sources for energy in the form of wood and animal products. Many years later, people often relied on hydropower, using running water to enable grain processing and other agricultural activities. The industrial revolution saw the first widespread use of coal for energy. Today, society relies mostly on oil and natural gas, though coal, hydropower and biomass remain significant energy sources in various parts of the world.

Approaching renewable energy through this historical lens helps provide insight into the changes to come. A transition to renewables will have economic impacts on an individual, community and national scale. Electric utilities looking towards the future find it’s helpful to consider the implications at each scope.

See the Impact

Some of the positive impacts of a transition to renewables will affect individuals and companies. For instance, rural landowners can receive passive income from hosting renewable energy technology on their land — rural locations often make the most feasible placements for renewable technology. In addition, building owners and homeowners see increases in their property value when they purchase renewable technology. They have a marked advantage in the real estate market.

Another example is the financial savings of decreased personal energy bills. When an individual chooses to generate their own electricity with renewable technology, they enjoy reduced expenses. If they stay on the existing energy grid, they can take advantage of net-metering policies. If they choose to disconnect from the grid and use renewable technology to meet all of their energy demands, they need not pay anything to the utility company. Businesses and homeowners benefit from using renewable energy.

Utility companies also enjoy financial gains. They can take advantage of the growing demand for renewable energy among their consumers and partners, providing favorable policies to attract new business. Alternative energy is a worthwhile investment on an individual or company level.

One of the biggest economic concerns in the wake of a renewable energy transition is how it will affect fossil fuel workers and their families. Fossil fuel jobs tend to be geographically concentrated. Where fossil fuel jobs are prevalent, renewable opportunities are available.

In the United States, most fossil fuel jobs are concentrated in states like Texas, North Dakota, California and Oklahoma. Though fossil fuel communities have seen a decline in public resources and job opportunities, these trends need not continue. These regions are prime locations for renewable energy technology, opening doors for new job opportunities. Those who have built their careers around fossil fuels will have the chance to become pioneers of the energy shift.

Policymakers should focus on creating a smooth transition for such communities. The Department of Energy is channeling funds into supporting fossil fuel communities. Funds will help make possible:

  • Critical infrastructure investments.
  • Broadband connection.
  • Transportation.
  • Pollution cleanup.
  • Reclamation of abandoned mines.
  • Carbon capture efforts.
  • Small business operations.
  • Non-profit establishment and operation.
  • Regional revitalization and workforce training.

With the federal government providing the funds and upholding the projects needed to support fossil fuel communities, families within these regions should enjoy a smooth transition without significantly reducing resources or opportunities. The question of how a renewable energy transition will impact those who live in fossil fuel communities is vital to consider — legislators have already begun to address the concern and should continue to do so throughout the coming years.

The widespread switch to renewable energy will also affect national economies. As the United States decreases its reliance on fossil fuels, it will also decrease its dependence on fuel-producing foreign nations. Complete energy independence is a major benefit of renewable energy. The international political implications are a fundamental part of the equation.

Is Renewable Energy Economically Sustainable

Renewable energy is economically sustainable. Each year, the costs of renewable energy decrease with technological improvements — at rates sharper than experts predict. Continued research, along with increasing infrastructure, are making renewable energy more and more economically viable. Decreasing costs, along with ongoing incentive programs, make renewable energy sustainable from an economic perspective. This reduction over time should make both energy providers and project developers optimistic for the future.

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How to Compare Costs Across Resources

The cost of the transition to renewables will depend on many factors. While renewable energy costs are lower than ever, some projects will be less expensive than others. For example, projects requiring offshore components present logistical challenges and can be costly. Contesting with the ocean is no simple feat. For that reason, offshore wind projects tend to be more expensive than onshore wind projects.

In addition, solar photovoltaic projects tend to cost less than solar thermal projects, as the technology is more prevalent and better developed. Among renewable energy sources, hydroelectric is generally the least expensive. However, its availability varies from one location to the next.

The costs of two renewable energy projects are seldom the same. Costs depend on factors such as geography, local policies and site-specific complications or restrictions. They also vary based on the newness of the technology at hand, as newer solutions tend to be the most expensive.

Learn More About the Economics of Renewable Energy

Renewable energy efforts result in complicated economic situations. While not every individual, company, town and nation will see immediate benefits from the shift, the overall implications are positive. Emerging technology continues to drive down renewable energy costs. Now is an ideal time for utilities to invest in alternative energy as the field advances and expands.

Learn more about the economic impacts of a widespread renewable energy shift.

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Go to Part 2: Environmental Impacts

The transition to renewable energy sources will have notable environmental impacts as well as economic impacts. To understand the possible implications, you’ll need some background knowledge of the ways fossil fuels affect the environment.

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