The economic benefits of renewable energy

As renewable energy becomes more widely adopted throughout the United States, it's important to understand the economic benefits of solar, wind, and other renewable energy resources. From providing lower cost electricity to generating reliable, local jobs and to avoiding costly externalities associated with emissions from burning fossil fuels, renewable energy is an economic boon.

Perhaps the most significant economic benefit of renewable energy technologies is the cost of the electricity that they generate. Once built, wind turbines, solar farms, and other types of renewable energy produce electricity at low cost. This is a significant difference from electricity generated from fossil-fired power plants: to run a natural gas or coal power plant, utility companies need to purchase the natural gas and coal that the power plants will ultimately burn. These fuel costs vary season to season, year to year, and region to region. They are a significant component of the costs associated with our current electricity system in America.

Changes in these costs can substantially impact the economic viability of a specific type of electric resource. For instance, due to the shale gas boom, natural gas has been very inexpensive for a prolonged period. This has made electricity from natural gas plants less expensive than electricity generated from coal, leading to the early retirement of many coal power plants throughout the United States over the last five-to-ten years. Pegging volatile prices of fuel commodities can lead to very high, unexpected electricity costs that the end consumer ultimately bears.

On the other hand, renewable energy resources do not burn any fuel and therefore require no fuel costs to run. As a result, aside from the upfront capital expense of building a wind turbine or installing solar panels, the only ongoing costs associated with renewable resources are minimal operations and maintenance costs. This allows renewable energy–such as wind and solar–to provide a stable, predictable source of low-cost electricity, which can help mitigate future increases in electricity costs for consumers.

Investment in renewable energy resources leads directly to jobs (and plenty of them). On a per-megawatt basis, installing renewable energy resources results in more jobs than installing traditional generation sources. Annual residential solar installations have remained stable over the last few years as utility-scale installations have continued to increase, meaning that solar jobs are likely to remain steady for the foreseeable future.

The recently released Solar Jobs Census from The Solar Foundation found that the solar industry today employs nearly a quarter-million workers across the U.S. Solar jobs have grown by 148% between 2010 and 2020, despite impacts from the COVID-19 pandemic, making it one of the fastest growing jobs in the country. Importantly, these solar jobs are distributed throughout the country, as opposed to just being focused in areas with coal or natural gas deposits. Solar jobs are local, especially residential solar jobs requiring knowledge and access to local communities nationwide.

Another way to estimate the renewable jobs associated with a given policy announcement or clean energy investment is to use the Job and Economic Development Impact (JEDI) models. The National Renewable Energy Laboratory (NREL) offers the JEDI models as free job impact models that specialize in analyzing renewable energy jobs.

Interestingly, there are fewer than fifty thousand coal jobs nationwide these days. For as large of an industry as coal power once was, it now employs fewer people than Arby’s. What’s more, fossil fuel jobs only exist in a few specific resource-rich geographical areas. On the other hand, renewable energy jobs are local and exist throughout the country, wherever the sun shines and the wind blows.

One major economic benefit of renewable energy is future avoided costs. Emissions from fossil-fired power plants–primarily carbon dioxide, sulfur dioxide, nitrous oxides, and particulate matter–are very costly to society. They adversely impact local and regional air and water quality, are linked to myriad health problems and even premature death, and are causing massive and perhaps irreversible changes to the climate.

Renewable energy, on the other hand, produces electricity free of emissions. Generating a unit of electricity by harnessing the sun or the wind doesn’t require burning any fuels and, as such, avoids emissions altogether. Even when accounting for the entire lifecycle impacts of manufacturing, shipping, installation and decommissioning, electricity generated by solar panels still results in 96 percent fewer emissions than the same unit of electricity generated by coal-fired power plants.

Though there is no price placed on emissions from carbon at a national level, there are ways to calculate the cost of these externalities associated with burning fossil fuels. For one, the federal government estimates the cost of emitting carbon through the Social Cost of Carbon, which is often considered a low-end estimate of how much carbon emissions truly impact society.

The economic benefits of renewable energy do not just accrue system-wide; in fact, you can begin to harness the benefits of renewable energy today by going solar. To see how much renewable energy can save you at your home, check out the EnergySage Solar Calculator, which allows you to estimate your savings with just your address and estimated electricity bill. If you’re ready to harness the economic benefits of renewable energy at your home, register for a free account on the EnergySage Marketplace to compare up to seven quotes from local, pre-screened solar installation companies.