Renewable energy is providing affordable electricity across the country right now, and can help stabilize energy prices in the future.
The costs of renewable energy technologies have declined steadily, and are projected to drop even more. For example, the average price of a solar panel has dropped almost 60 percent since 2011 . The cost of generating electricity from wind dropped more than 20 percent between 2010 and 2012 and more than 80 percent since 1980 . In areas with strong wind resources like Texas, wind power can compete directly with fossil fuels on costs . The cost of renewable energy will decline even further as markets mature and companies increasingly take advantage of economies of scale.
While renewable facilities require upfront investments to build, once built they operate at very low cost and, for most technologies, the fuel is free. As a result, renewable energy prices are relatively stable over time. UCS’s analysis of the economic benefits of a 25 percent renewable electricity standard found that such a policy would lead to 4.1 percent lower natural gas prices and 7.6 percent lower electricity prices by 2030 .
In contrast, fossil fuel prices can vary dramatically and are prone to substantial price swings. For example, there was a rapid increase in U.S. coal prices due to rising global demand before 2008, then a rapid fall after 2008 when global demands declined . Likewise, natural gas prices have fluctuated greatly since 2000 .
Using more renewable energy can lower the prices of and demand for natural gas and coal by increasing competition and diversifying our energy supplies. An increased reliance on renewable energy can help protect consumers when fossil fuel prices spike.
In addition, utilities spend millions of dollars on financial instruments to hedge themselves from these fossil fuel price uncertainties. Since hedging costs are not necessary for electricity generated from renewable sources, long-term renewable energy investments can help utilities save money they would otherwise spend to protect their customers from the volatility of fossil fuel prices.