Policy Analysis

1795 WordsFeb 23, 20128 Pages
Policy analysis Costs of Renewable Energy Resources Policies are needed to support renewable energy initiatives due to the barriers that prevent investments from occurring. Barriers often put renewable energy at an economic or institutional disadvantage relative to other forms of energy supply. Costs of renewable energy can be broken up into three categories Environmental, Economic, and Political impacts. The environmental impacts of fossil fuels often result in real costs to society, in terms of human health (loss of work days, health care costs), infrastructure decay ( from acid rain), declines in forests and fisheries, and perhaps ultimately, the costs associated with climate change. Dollar costs of environmental externalities are difficult to evaluate and depend on assumptions that are often subject to wide interpretation. Although environmental impacts and associated dollar costs are often included in economic comparisons between renewable and conventional energy, investors rarely include such environmental costs in the bottom line used to make decisions. Economic barriers often stem from the understanding that cost-effective technologies are perceived as risky if there is little experience with them in a new application or area. The lack of visible installations and familiarity with renewable energy technologies can lead to perceptions of greater technical risk than for conventional energy sources. These perceptions may increase required rates of return, result in less capital availability, or place more stringent requirements on technology selection and assessment of resources. Utilities may be hesitant to develop, acquire, and maintain unfamiliar technologies, or give them proper attention when planning. Prejudice may exist because of poor past performance that is not equivalent to the conventional source of energy that is already being used.

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