Impact of Renewable Energy on Economy (2021)

Analyzing the economic benefits of renewable energy in the present world context

Impact of Renewable Energy on Economy

Renewable energy is a clear winner when it comes to boosting the economy and creating jobs

Tom Steyer

The role of renewable energy as a savior of the environment is unquestionable. But, the enormous impact of renewable energy on the economy is something that we often don’t realize. Renewable energy sources like solar energy, wind energy, geothermal energy, and hydropower have a definite influence on the global economy.

We did extensive research on this subject matter. And this blog is an attempt to present our research in a precise manner.

So, let’s explore the impact of renewable energy on economy from both positive and negative perspectives.

Economic Benefits of Renewable Energy

Substitution of conventional energy with renewable energy will bring stability to energy prices. There will be a substantial increase in the number of energy sources to meet the public demand.

According to the report published by IRENA (International Renewable Energy Agency), if the world double’s the current share of renewable energy, we can expect an impressive 1.1 percent of GDP growth by 2030.

This 1.1% of GDP growth translates into a whopping $1.3 Trillion. Impressive, isn’t it?

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Renewable Energy SourceInvestment Percentage (%) in Billion of Euros (2016)
Solar EnergyPhotovoltaics- 11,1 
Solar Thermal Energy- 5,3 
Wind EnergyOnshore wind- 46,2
Offshore wind- 18,3
Geothermal7,4
Hydropower0,2
BiomassBiomass Heat- 9,7
Biomass Electricity- 1,8
Renewable Energy Investment Distribution by Percentage

1. Renewable energy provides job opportunities

Renewable Energy extraction uses both workforce and technology. Therefore, this sector has great potential in creating job opportunities for youth.

According to the 2015 IRENA (International Renewable Energy Agency) Report, the Renewable Energy industry as a whole created more than 7.7 million jobs in 2014 alone.

Download the PDF of the report here.

Furthermore, you can expect a sharp surge in job creation when the industry will mature properly.

The 2018 IRENA Report predicts renewable energy to create as many as 14 million additional jobs by 2050.

impact of renewable energy on economy
Distribution of Jobs by 2050 (Source: 2018 IRENA Report)

2. Reduces health expenses

The harmful emissions of fossil fuels in the air and water deteriorate human health. 

Adapting Renewable Energy would improve water quality, air quality, and overall health. And Indeed will have a positive impact on the economy and human resources.

3. Reduces energy costs

Generating renewable energy is the best practice for commercial, home, and industrial usage to save money on electric bills. 

Besides, by embracing renewable energy sources, families will become self-dependent on their energy requirements.

4. Energy regulations

To maintain a balance between the Energy Demand Management which consists of Demand-Side Management (DSM) or Demand Side Response (DSR). 

Here, the primary objective is to encourage the consumers to use less energy during peak times, like in the summer season. 

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Peak times: The time where electricity demand is higher

In this way, there would be a balance by storing the energy at units during off-peak times and releasing it during peak times. 

Hence, this initiative would help to regulate energy efficiently.

5. Economic sustainability

The creation of Aggregators operating Virtual Power Plants aims to enable small energy sources. In addition, to provide energy grids and use energy units according to demand.

Power grid distribution is the final stage of electricity distribution to the end-users.

Renewable energy sources also promote small-scale industries like manufacturing solar panels, solar ovens, wind turbines, etc.

6. Boosts in property price

Building the infrastructure demands large portions of land and specifically for the production of renewable energy sources. If a piece of land produces energy, its monetary value increases exponentially.

The increase in property price is always an early indication of economic growth.

Negative Economic Impacts of Renewable Energy

Enough of positive things, but at the same time, one must not ignore the negative impact of renewable energy on economic growth. There are some risk factors associated with renewable energy sources.

Let’s explore them one by one.

1. Giant investment requirements

Considering the amount of time and money investment in these projects, Infrastructure generation for renewable energy is never a one-day process.

But, in return, the power generation is relatively on the lower side. So it’s in no way cost-effective, at least, at the beginning stage.

2. Unpredictability

The weather has a direct impact on renewable energy production. As the weather condition keeps on changing, prediction becomes entirely uncertain.

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Sometimes, there is a lack of power generation even after a huge investment in building large infrastructures. 

Therefore, from an economic point of view, it becomes relatively unreliable.

Besides, the end-consumers who are dependent on that particular energy source also suffer, as

Energy Production < Energy Demands

3. Training expenses

Joint ventures of world organizations in developing renewable energy infrastructure sound easy but generating it for a large population demands trained professionals. And, you can’t accomplish it without the help of local people.

These trained professionals must have experience at a small scale, so it would become easy for them to handle energy generation at a large scale. 

Thus, economically it is less reliable and requires a lot of time to provide high-level training to your local population.

Editor’s View

The non-conventional resources are continuously replenishing and become crucial for the economic development of a country. Going towards these resources will reduce environmental pollution. And the proper implementation of correct technologies will boost the economy. 

The process of installation, job creation, and development requires adequate knowledge and guidance. Embracing the abundance of nature would offer pollution-free resources without hampering economic growth.

Did you find the opinion piece helpful? Let us know in the comment section below.

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13 thoughts on “Impact of Renewable Energy on Economy (2021)”

  1. Well that’s quite impressive and informative, it’s really important to realize potential of renewable energy to maximum extent possible, it would surely give an upper economic edge.

  2. Potential of renewable energy is quite impressive and important for ecological balance of environment. It will definitely provide platform for development of World 🌎

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  4. Renewable energy source will be the best option for minimizing pollution, increasing economy and job opportunities and poverty will be reduced because mostly poor people rely on the natural resources.

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  7. Dr. Anita Mishra

    An incredibly informative and well-written article. The meticulous research is self-evident and the presentation of arguments is also quite convincing.
    Renewable energy is the hot topic in international environmental summits and all Governments should devote more thoughts in implementing it .

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