What Are the Economics of Alternative Energy?

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  • Written By: Esther Ejim
  • Edited By: Kaci Lane Hindman
  • Images By: William Warby, Harvey Barrison
  • Last Modified Date: 11 May 2020
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Alternative energy sources refer to those that are not derived from the traditional sources that are in common usage, especially those that are derived from fossil. Most of these sources of alternative energy are desirable simply due to the facts that they offer a choice to consumers other than the usual forms and that the traditional fossil energy sources are depleting and cannot be renewed. The economics of alternative energy refers to the economic concerns that are usually associated with the procurement and use of these alternative energy sources.

A factor that is included in the economics of alternative energy sources is the fact that the ease with which consumers can obtain the traditional form of energy makes them less popular than those traditional sources. This inclusion in the economics of alternative energy can be seen in the elaborate preparations that must first of all go into the procurement of energy by other sources. Assuming a consumer wants to boil some water, such an individual can easily do so by turning the knob on the gas cooker. If such a consumer wants to boil the water through the use of firewood or charcoal, the process would be a longer, messier and more labor intensive, something that most consumers find unappealing.

The exorbitant cost that goes into setting up most of these alternative energy sources also makes them less practicable choices for consumers who may have a limited budget with which to work. For instance, this can be seen in the cost of setting up a solar-based source of energy, an undertaking that will involve the installation of costly solar panels and other necessary equipment. The same goes for the setting up of a dam or hydro station as well as other complexes like nuclear plants. Even the nuclear plants sometimes consume more than they deliver in terms of material resources and human efforts due to the fact that the maintenance of such plants require special considerations in order to manage the emissions they put out.

All of these factors contribute to the economics of alternative energy, including the rate of demand for the products, something that may be affected by the demand or lack of demand for them. For instance, the demand for other sources of energy, such as firewood, solar and wind, might increase as they become more attractive in the wake of high oil prices. The opposite will usually be the case, however, because the demand will drop when the oil prices reduce.

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