Renewable energy consulting firm, Ecofys, recently released report that found that solar had higher costs than wind and hydroelectric, but fared much better than coal and natural gas power in the European Union. What makes the study interesting is that it removed the subsidies that made renewable energy technologies attractive investments. At the same time, they added a carbon penalty for each technology.
The rationale for adding back the effects of government support for each power source is that renewable energy aren’t the only technologies that benefited from such interventions. “Public interventions in the energy market have been occurring for decades and some still have an
impact on energy prices in today’s markets,” according to the authors. In fact, “Support to production of electricity or of primary fuels such as coal, gas and oil makes up almost 70% of the total support,” they continue.
In addition, they estimated the “total environmental impacts” and monetized these in the analysis. Based on the analysis, the three biggest impacts were those on climate change (accounting for half of the total value), depletion of energy resources (comprising another 22%) and particulate matter formation (accounting for 15% of the total).
The result of the analysis was an estimate of the “leveled cost” or the estimated cost per megawatt-hour incorporating the costs of support and environmental impacts. The base year of the analysis was the year 2012. The researchers used established models to monetize the said costs. While a number of previous studies incorporated environmental impacts of power generation, this study is unique in that it also included energy resource depletion as an added cost.
The result was that solar power was more expensive when compared to wind and hydroelectric, and was almost the same as nuclear power. Solar had significantly higher costs of climate change impact, human toxicity and particulate matter production than wind and hydro. The reason was that the source of equipment had an impact on the aforementioned factors.
Most solar panels are made in China where most electricity comes from coal fired power plants. In effect, it takes a lot of coal to produce a MW of solar cells. Also, Chinese coal fired power plants use lesser grade coal and have little to no environmental controls.
As noted above, the result of the study is the leveled cost estimates of various energy source for the year 2012 in the EU. Different studies need to be prepared for other regions and for other time periods, as needed. With various technologies being developed for solar power, it wouldn’t be surprising that solar would become one of the most competitive energy sources, even without government intervention. Not only will our economies save, but the environment will also be saved.
