Source: The post Green energy raises electricity costs despite popular belief has been created, based on the article “Let’s not deceive the poor world with an expensive green illusion” published in “Live Mints” on 23 May 2025. Green energy raises electricity costs despite popular belief.
UPSC Syllabus Topic: GS Paper3- infrastructure- energy
Context: The article questions the belief that solar and wind power reduce electricity costs. Drawing from real-world data in Germany, the UK, and China, it shows that relying heavily on green energy can raise prices due to hidden infrastructure and backup costs.
The Green Energy Cost Paradox
- Rising Costs in Rich Nations: Solar and wind are believed to be cheap, but utility bills in Germany and the UK show otherwise. Electricity costs have increased with more green energy.
- Double Energy Systems: Green power is not always available. Fossil fuel backups are still needed, meaning countries must pay for two systems.
- Cost Recovery Issues: As backup plants run fewer hours, they must recover capital over limited use, pushing prices even higher.
Evidence from Global Studies
- High True Costs: A Chinese study found solar power was twice as expensive as coal. A peer-reviewed study from Germany and Texas showed that solar and wind were many times costlier than fossil fuels.
- Strong Link to Higher Prices: IEA data shows for every 10% rise in solar and wind, electricity prices rise by more than 4 cents per kWh. Countries with low green energy pay around 11 cents per kWh.
- Germany’s Experience: Germany pays 34 cents per kWh, twice the US rate and nearly four times China’s. Despite having enough installed capacity to generate twice its demand, actual supply often falls short.
Power Gaps and Storage Issues
- Intermittency Problems: On days with good sun and wind, up to 70% of Germany’s needs are met. But on cloudy, windless days, solar and wind deliver less than 4% of required power.
- Battery Shortfalls:,Germany’s battery capacity lasts only 20 minutes. The rest of the day relies on fossil fuels. During such periods, prices reached $1 per kWh.
Policy Models and Inequities
- Transparent vs Hidden Costs: Europe includes green costs in bills, making impacts visible. In the US, they are masked by tax deductions, likely making actual prices 25% higher.
- Harm to Poor Nations: Poor countries are discouraged from using fossil fuels. Yet, in 2023, most new power in these nations came from coal, not renewables.
Way Forward
- Subsidy-Driven Illusion:,Green energy growth in rich nations depends on subsidies and existing fossil infrastructure, not real cost advantages.
- Focus on Innovation: Only when green energy becomes genuinely cheaper will transition succeed. Priority must shift to cheaper batteries and fourth-gen nuclear. First, the world must accept the truth.
Question for practice:
Examine how the reliance on solar and wind energy affects electricity prices in different countries.
