How does renewable energy economics compare with fossil-fuel generation economics?
The economics of renewable energy are the opposite of fossil fuel-based economics. Fossil-fuel energy plants have low fixed-cost, high variable cost economics. After 150 years of burning fossil fuels, weve gotten pretty good at building relatively inexpensive coal, oil and natural gas power plants. Their initial construction costs for each watt of energy produced is seductively low. Their operating costs, however, are highly variable are increasingly dominated by the cost of fuel. For the average utility plant, more than 90 percent of annual costs result from the purchase of fuel. Passage of a carbon-tax and the enactment of a state or federal Renewable Portfolio Standard will significantly drive up the annual operating costs over their expected service life. Renewable energy has higher fixed-cost, near-zero variable cost economics. A renewable energy system has a higher up-front cost for each watt of energy generated. State and federal incentive programs for renewable energy have dram
