What is the Real Cost of Energy?

published Oct 16, 2014
1 min read

Study compares wind with coal and gas and shows wind is the least expensive source of energy.


Although renewable energy is steadily growing, there are still debates regarding the benefits of investing in this industry. Some argue that it is too expensive, others that its efficiency is insignificant compared to that of fossil fuels. However, there are no doubts that using fossil fuels to generate electricity is harmful to the environment. It is known to everyone that renewable sources of energy are a lot more environmentally friendly. However, since this benefit is hard to measure in numbers, it is generally not considered and therefore the results when comparing renewable energy with non-renewable sources are wrong.

A recent study by the Ecofys consultancy for the European Commission, compares wind energy with coal and gas. In general, when comparing the cost of different sources of energy, there are some key factors that are not taken into account since they are harder to measure. This short-term analysis leads to misleading results, since for example, the harm fossil fuels cause to the environment will effectively mean a cost to society in the long term. This report adds to the cost analysis the human health damages, the impact on ecosystems and biodiversity and the resource depletion (primarily water, metals and fuels but also crops, buildings and more) caused by each source of energy that they compare.

To the surprise of many opposers of green energy, in this report by the Ecofys consultancy, wind showed to be less expensive than coal and gas when taking external factors into consideration. The results of the study are that while coal and gas cost around 164 and 233 Euros per MW/h, onshore wind costs 105 Euros per MW/h. The study also analysed the costs of offshore wind, solar energy and nuclear power, which proved to have a similar cost of approximately 125 Euros per MW/h. This study was the first to provide consistent data on energy costs and subsidies for all EU Member States and for all technologies.

Renewables are regularly denigrated for being too expensive and a drain on the taxpayer. Not only does the commission’s report show the alarming cost of coal but it also presents onshore wind as both cheaper and more environmentally-friendly.” said Justin Wilkes, the deputy CEO of the European Wind Energy Association (EWEA).

Another great advantage of renewable energy is that the prices of these technologies are dropping significantly as years go by. On the contrary, price of fossil fuels are steadily increasing as they become scarce. Plus, the report shows that that total levels of support for nuclear power and coal are close to solar and higher than wind.