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The traditional cost-plus pricing structure used to evaluate energy resources does not adequately capture the real value of renewable energy.  Many of the negative implications of conventional energy sources are externalized and there by not seen directly by the consumer as a cost.  In the same way many of the benefits of renewable energy are externalized and often not understood or considered by consumers.  A shift in the way society thinks about energy is required to fully understand these values.  Rather than viewing energy as a commodity we need to understand that energy is a product with far reaching effects on society.  Long time critics of renewable energy often focus completely on the costs without fully exploring its total value, while renewable energy advocates preach about the benefits of renewable energy without fully acknowledging its costs.  The goal of this website is to have a real dialogue between both camps in order for everyone participating to increase their understanding.

Risk Management - Renewable energy installations offer homeowners the ability to manage the risks of fuel price volatility.  Since the main costs of renewable energy installations are upfront capital costs the users ensure the cost of their energy at the time of installation and are no longer subject to the large fluctuations in raw material costs which dominate conventional energy industry.  The energy giants are normally able to pass the increasing costs of raw materials on to the end users so these large corporations have less incentive to hedge against the rising resource costs than end users.  This can be seen in particular when comparing the price of oil with that of gasoline.  As the price for a barrel of oil increases these increases are passed directly to the end users in terms of dollars per gallon at the gas pump.  An additional risk to homeowners is the instability of the power grid; grid outages disrupt lives in terms of discomfort, health, and the ability to work.  Homeowners employing renewable energy with some modest energy storage capabilities are protected from these power outages by being able to supply directly some of their own energy requirements.   

Emissions Reduction - The EPA reports that electricity generation is the largest industrial source of air emissions.  Generating electricity is responsible for the creation of 40% of the nation’s CO₂ emissions, 23% of NO_x emissions and 67% of SO₂ emissions (www.epa.gov/cleanenergy/emissions.htm).  These air pollutants contribute to the formation of smog and haze, numerous health problems including lung and heart disease as well as global climate change.  To see how much of the various air pollutants are produced per kilowatt-hour in your state visit ftp://ftp.eia.doe.gov/pub/oiaf/1605/cdrom/pdf/e-supdoc.pdf.  Each renewable energy installation helps to reduce these emissions and improve air quality.    

Policy Incentives - Federal, State and Local governments offer various incentives to increase the use of renewable energy.  These incentives are often complicated and it may be difficult for individuals not accustomed to dealing with these agencies to understand what the incentives are and how to maximize their returns.  Additionally renewable energies are often criticized as not being viable without incentives; however this is an unfair comparison as government programs incentivize every branch of the energy industry.  The conventional energy industry has been lobbying the Congress very hard lately in order keep their tax incentives and their representatives claim that conventional energy would not be viable without government incentives.   

Reduced Resource Use - The benefits of reduced resource use are in general applied to society as a whole rather than an individual user.  According to 2006 studies by the EIA and UCS each 1% penetration of renewable energy to the energy market will decrease the cost of natural gas by 0.5% because of reduced or offset demand.  Conventional energy resources are finite and any bit of energy offset that renewable energy can provide helps to sustain our current standard of living.  In addition to taxing finite energy raw materials conventional energy production uses large amounts of fresh water.  Thermoelectric power plants use approximately 25 gallons of fresh water per kWh produced.  This represents 39% of fresh water use in the U.S. (National Energy Technology Laboratory. (2005) http://www.netl.doe.gov/coal/E&WR/water/power-gen.html  )  

Social Responsibility - The value of social responsibility will be different for each individual and will also depend on what they understand about the state of the environment and the energy industry.  Here are a few thoughts which I feel are worthy of consideration in making our energy value choices:

• Our pollution has the potential to affect the quality of life on earth for hundreds of years to come and it is important to examine this potential when making choices.
• What will our grandchildren think about this generation?-Will we greedily consume all the resources we can to maximize our own standard of living or will we use the gifts that we have been given to create a truly sustainable way of life?

I don’t offer answers to these questions because that would only be my own thoughts, instead I merely pose them for your reflection. 

Societal Economic Benefits - Renewable energy technologies help to stimulate the local economy.  The costs associated with renewable energy are primarily related to manufacturing, transportation, construction and R&D all creating high quality sustainable jobs.  The primary costs associated with conventional energy sources, on the other hand, are raw material related so the addition of energy capacity creates fewer jobs than the addition of renewable energy capacity (Pater, JE. NREL/TP-620-38597, February 2006).  The health of our economy is very highly tied to the affordability of energy.  Currently our energy costs are nearly completely dependent on the price of oil and natural gas.  Diversification of our energy portfolio will stabilize our GDP similar to the way a diverse stock portfolio stabilizing annual returns (Koren, M. and S. Tenreyro. (December 2004) Technological Diversification. Federal Reserve Bank of Boston Working Paper 05-1).  

National Security - Increased implementation of renewable energy improves national security.  Renewable energy can offset oil imports and since much of the worlds remaining oil reserves are in unstable regions this energy diversification helps to reduce the impact of these regions on the U.S.  Problems with the electricity grid and energy supply have in recent years caused much damage to the U.S. economy and disrupted the lives of thousands.  Distributed renewable energy has the potential to stabilize the electricity grid and to help prevent blackouts and rolling brownouts that we have seen increasing in recent years.  (Hadley, et al. “Quantitative Assessment of the Distributed Energy Resource Benefits.” U.S. DOE Oak Ridge National Laboratory. May 2003); (Young, W. “Assuring Power in a Disaster and Providing Energy Security.” Proceedings of ASES Annual Conference. July 2004). 

Costs and Difficulties - One major problem is that the renewable energy industry is highly disorganized and it is not easy for consumers to get relevant understandable information and evaluate multiple technologies.  In order for consumers to make proper renewable energy choices they need access to accurate information about local resources and to be informed of the capabilities of multiple technologies.  There are widespread myths and conjecture about renewable energy technologies, which makes it difficult for consumers to differentiate between myths and real costs and performance metrics. The best implementation of renewable energy requires understanding and utilizing local resources to maximize value.  There is no magic bullet technology than can meet all of the world’s energy needs.   

Renewable energy installations also face public misunderstanding and dissent.  Many Home Owners Associations forbid their members from applying renewable energy technologies to their homes because they feel that these installations devalue the other homes in the neighborhood.  It is often difficult to change Homeowners Association regulations even when the majority of homeowners are in favor of such a change.  The key for improvement in this area is persistence not only with the Homeowners Association but also in working with the legislature to increase the acceptance of renewable energy by the general public. 

Renewable energy installations generally have high upfront capital costs as opposed to electricity provided by the power grid, which is usually cheap or free to consumers in terms of upfront costs. Energy from the power grid however will continue to have costs month after month forever, while renewable energy installations will have very little month to month costs after their capital costs are paid off.  There are some government incentives and priority loans, which help consumers, pay for renewable energy projects but most consumers must plan and save their money for some time in order to afford to utilize renewable energy at their homes.  It is of the up most importance for consumers to understand the costs of any potential installation up front and to know where to find necessary resources to maintain their investment.  Our RENEWABLE ENERGY CALCULATOR will help inform consumers of the potential of various technologies at their own location and demonstrate what the real costs of that technology are.  We also have introduced on this site a resource for consumers to find local installers and maintenance professionals as well as a forum to discuss problems, concerns, and success stories associated with renewable energy.

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