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Why haven’t alternative energy sources taken off in a bigger way yet?

Originally posted in The Business Standard on 17 February, 2023

Despite the many obvious benefits of alternative energy sources, such as lower greenhouse gas emissions and greater energy security, they have not yet fully taken off as a replacement for fossil fuels

For more than a century, fossil fuels have generated most of the energy to keep the lights on at our homes, propelled us from point A to B, and helped us produce goods at a scale never before seen in human history, all the while being effective, cheap, and reliable. But now, our planet is footing the bill for our indulgences. Even as you read this article, oil, coal, and gas meet around 80% of our energy demands. 

Greenhouse gas emission and air and water pollution are only a couple of the major problems caused by the use of fossil fuels. Not to mention the negative impacts from petroleum-based products such as plastic and chemicals. Even the extraction process of fossil fuels like coal and oil impact our great blue orb in a significant way.

Despite the many obvious benefits of alternative energy sources, such as lower greenhouse gas emissions and greater energy security, they have not yet fully taken off as a replacement for fossil fuels. There are a number of reasons for this, including economic, technological, political, and regulatory challenges.

Saving the planet is costly

One of the main reasons why alternative energy has not yet been widely adopted is cost. Many alternative energy technologies, such as solar and wind power, are still more expensive than traditional fossil fuels, making them less economically viable for widespread adoption.

For example, the US Energy Information Administration (EIA) states that in 2020, the levelized cost of electricity (LCOE) for natural gas-fired power plants was $41 per megawatt-hour (MWh). In comparison, the LCOE for utility-scale solar power was $50/MWh and $57/MWh for offshore wind power.

Furthermore, there are also infrastructure and logistical challenges to implementing alternative energy on a large scale. For example, building new power transmission lines to connect remote renewable energy sources to population centres can be costly and time-consuming. And the need for new storage technologies to store excess energy generated by renewable sources during periods of high production and low demand is an additional challenge.

Drawbacks of some major alternative energy sources 

Solar power is a clean and renewable energy source. However, one of the main drawbacks is that it is dependent on weather conditions and can be intermittent, which makes it difficult to rely on as a primary energy source. Additionally, solar panels can be expensive to install and maintain.

Like solar, wind can also be intermittent. Wind turbines can be controversial due to their impact on wildlife and aesthetic concerns. Additionally, turbines need to be located in areas with consistent wind patterns to be effective.

Hydroelectric power uses the energy of moving water to generate electricity. However, hydroelectric power can also be contentious due to its impact on local ecosystems, as well as its dependence on water resources, which can be affected by droughts.

Nuclear power does not emit greenhouse gases. Yet, they attract a lot of controversy because of their potential for accidents and the risk of nuclear waste disposal, which can be harmful to humans and the environment.

Biofuels, such as ethanol and biodiesel, are made from renewable biomass, such as crops and waste materials. However, one of the main drawbacks of biofuels is that they can be expensive to produce, and the use of crops for biofuels can lead to food shortages and higher food prices. Additionally, biofuels can also have a negative impact on the environment, such as deforestation and habitat destruction, when produced on a large scale.

Regulatory drawbacks

Another reason why alternative energy has not yet taken off is the lack of political and regulatory support. The development and adoption of alternative energy often involves navigating complex policy and legal frameworks, which can be difficult and time-consuming.

The lack of a clear regulatory framework for land acquisition, transmission and grid integration, and project financing has made it difficult for developers to secure the necessary approvals and funding for renewable energy projects.

Regulatory barriers can take many forms and can make it difficult for alternative energy sources to compete with traditional fossil fuels. Some examples of regulatory barriers to the mass adoption of alternative energy sources include:

Net metering policies – Net metering policies determine how much homeowners and businesses are compensated for the excess energy they generate from their solar panels or wind turbines. In many countries, net metering policies are not favourable to the consumer, making it less attractive to invest in alternative energy systems.

Zoning and permitting – Zoning and permitting regulations can also act as barriers to the adoption of alternative energy sources. For example, some municipalities have zoning laws that restrict the installation of solar panels or wind turbines in certain areas, making it difficult for homeowners and businesses to take advantage of these technologies.

Renewable portfolio standards – Renewable portfolio standards are policies that require utilities to generate a certain percentage of their electricity from renewable sources. In some cases, these standards can be weak, making it difficult for renewable energy to compete with fossil fuels.

Tariff policies – Tariff policies determine the cost of electricity from renewable energy sources compared to fossil fuels. In some cases, tariffs for renewable energy can be higher than for fossil fuels, making it less attractive for consumers to choose renewable energy. One example of a policy-level barrier holding back the adoption of alternative energy sources is the regulatory barriers in India. India has set ambitious targets for renewable energy generation but the lack of clear regulations and tariff policies has made it difficult for the sector to grow.

To make things more complicated, there are often conflicts of interest between energy companies, government agencies, and special interest groups that can impede progress on alternative energy development.

The logistics barrier

In large parts of the world, the limited transmission capacity is a significant barrier for the development of renewable energy projects. The lack of transmission infrastructure in remote locations makes it difficult to transport the energy to population centres and can increase the cost of the energy.

Interconnection standards determine the technical and administrative requirements that must be met for a renewable energy system to be connected to the grid. In some cases, these standards can be complex and difficult to navigate, making it difficult for homeowners and businesses to install renewable energy systems.

Moreover, a Not In My Backyard (NIMBY) attitude can be a significant barrier for the development of renewable energy projects, as local communities may protest against the construction of wind turbines or solar panels in their vicinity.

Despite these challenges, there are many efforts underway to overcome these barriers and promote the wider adoption of alternative energy. For example, governments around the world are providing financial incentives and subsidies to encourage the development and deployment of renewable energy technologies. Additionally, advances in technology, such as the development of more efficient solar cells and wind turbines, are helping to make alternative energy more cost-competitive with fossil fuels.