Renewable energy?
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In today's newsletter, we are going to shed light on the world of renewable energy. Harnessing the power of natural resources such as sunlight, wind, water, and geothermal heat, renewable energy offers sustainable alternatives to fossil fuels. We will take a look at how much renewable energy costs to produce, the levels of investment it receives, and the capacity factor of energy sources.
Levelized cost of renewable energy
The levelized cost of electricity (LCOE) is a measure of the average net present cost of electricity generation for a generator over its lifetime. As of 2021, the renewable energy sources don’t vary too much in terms of their generation cost, but the cheapest currently is onshore wind which has come down 90% from 1983. Concentrated solar power is the most expensive to generate at $0.11/kWh, but this has also come down significantly in cost as may be seen from the chart below.
Investment in renewable energy
As the global demand for clean and reliable energy continues to rise, investing in renewable energy technologies has increased significantly, as may be seen below. Currently, solar energy has received the most investment at over $140B, closely followed by wind energy at $131.5B. These two energy technologies have received more and more investment as time has gone on. On the other hand, we can see that liquid biofuels received a good amount of investment in the mid to late 2000s, however by 2018 its share of investment has decreased significantly.
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Capacity factor by energy source
Capacity factor essentially measures the reliability of power plants, based on how often the plant is running at maximum power. Nuclear energy is the clear front runner here at almost 93%. Renewable energy such as wind and solar, tends to have a lower capacity factor because of their inherent nature. For example, with solar the Sun isn’t shining 100% of the time and is not always at the correct angle to generate electricity. The same may be said about the capacity factor of wind.
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