Economics of Clean Energy

Cost reductions for solar panels have been phenomenal over just the past half a decade. The world took quite some time to master the manufacturing and use of this technology; and slightly less time to roll it out and deploy all over the world. Subsidies are being withdrawn and feed-in tariffs have been falling for solar power as solar energy reaches cost levels close to grid parity. Now we move on to thinking about the cost of solar intermittency and mitigating the cost that it afflicts to the grid and users.

I don’t think the economics of solar energy will work without the initial subsidies or at least the progress will take longer. The coordination impact of government direction, incentive policies and commitment towards clean energy helped us draw intelligent, passionate people into the industry, and concentrate the efforts it take in order to get the economics through.

There are still many different areas of the reality where scale economics can operate and help new domains succeed. But the difficulty they have is to line up the stars for that. The principle for selecting those areas to push for lies outside economics – for example, climate change, a better environment for the next generation, or to just improve animal welfare.

Even as we understand the economics of things we ought to recognise a lot of resource allocation decisions can lie beyond the realm of economics because we don’t have perfect information and knowledge across time.