The Economics of Renewable and Green Energy

Green Energy and the Economic Sense
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Green Energy and the Economic Sense
Renewable energy sources like solar and wind power have risen to become the cheapest mode of electricity sources. Over the past years, prices of renewable energy sources have been declining, thus reducing the economic burden to a certain percentage (IRENA, 2015). The so-called green energy has provided a clean alternative source of electricity and reduced costs, thus stimulating the economy to grow due to reduced electricity bills. Green energy consumption can be calculated based on the energy produced and the resources used during the latter's production stage.
Minimal investment is allocated to the power sector when switching to green energy, unlike developing a new nuclear or coal power plant (IRENA, 2015). Further, it results in lower prices charged on power supply, and in the long run, the economy is relieved from extreme pressure. Lower electricity products lead to reduced costs in production and increased profit (Zhang & Lis, 2020). Concurrently, there will be a reduced expense on the power supply; thus, families will shift their resources to other activities that require more capital. From shifting to green energy, the economy is stimulated to rapid growth, more so in the developing countries where a small percentage is connected to electric supply due to lack of infrastructure to enhance development.
The economics of renewable energy are determined through electricity marketization by comparing the computation result of the Levelized Cost of Energy with that of the market-clearing value (Timmons et al., 2014). Current and future costs of constructing and running a plant throughout its expected duration are represented in terms of Levelized costs, expressed in real terms to account for inflation (Timmons et al., 2014). Renewables' prices must typically fall below the standard energy cost, and fossil fuel sold to the grid to be cost-competitive. Traditional power sources are virtually cost-competitive with wind and geothermal. While the cost of renewable energy is declining, future market prices may not be ideally lower than the current price...