Tuesday, October 21, 2008

A hidden foe for renewable energy?

I had an interesting thought today about a reason why so many companies are unwilling to devote more money to renewable energies and it has to do with money. Now I'm not talking about start up/building costs, or amount of energy produced; but rather profits. Could one of the real reasons many companies hate putting money into renewable energy sources such as wind and solar be one of the very reasons renewable energy is so appealing? Cheap energy is cheap.

In order for a coal or gas plant to run, the raw materials have to be bought, and the energy companies pass that cost, along with their own "add-on costs" (aka profits), onto the consumer (if you don't think thats the case then you have a pretty naive view of businesses). When it comes to renewable solar and wind energy, however, there is no raw materials to buy and thus it makes it harder for companies to mask their profits as "add-on costs". Aside from the initial costs to build, which every type of energy has, the only additional cost comes from regular maintenance because sun and wind are free to access. The middle men (energy companies) can't very easily jack up prices when everyone knows, you don't have to have a company mine the sun or drill the wind. Suddenly the middle men lose most of their power and as a result lose profits. Thus they aren't as willing to rapidly advance using renewable energy.

Also, with a little investment, anyone can capture renewable energy at their own homes and mostly, or completely, bypass the energy companies. An average everyday person can easily go and buy their own solar cells, and wind turbines to put on their homes and as a result reduce, or reverse (go from paying the company for energy to being paid by putting unused power back on the grid), their energy bill. A person can't do that with coal or natural gas so they are forced to buy coal or natural gas produced energy from the energy companies.

That being said, I do think that eventually when natural gas, coal, and oil run out (and they most definitely will); these companies will be forced to take lower profits by using renewable energy.

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