Approximately 80 per cent of the world’s population lives in countries that import fossil fuels. This refers to about 6 billion people dependent on fossil fuels from other countries, making them vulnerable to geopolitical shocks and crises.
In contrast, renewable energy sources are available in all countries, and their potential is yet to be fully harnessed. The International Renewable Energy Agency (IRENA) estimates that 90 per cent of the world’s electricity can and should come from renewable energy by 2050.
According to the United Nations, Renewable energy is energy derived from natural sources that are replenished at a higher rate than they are consumed. It includes sources such as sunlight, wind, water movement, and geothermal heat.
Renewable energy brings environmental, social and economic benefits. According to a recent report by the IRENA, if we double renewable energy’s current share in the global energy mix, global gross domestic product (GDP) would increase by as much as 1.1 per cent, or approximately $1.3 trillion, by 2030.
There are many economic benefits associated with renewable energy both on a micro and macro scale. Some of these benefits include:
- Energy Independence
Energy independence is the ability to meet energy needs domestically, thereby reducing dependence on foreign nations and susceptibility to changing overseas energy prices. Using more renewable energy could help any nation achieve its energy independence, especially developing countries. Increasing the amount of renewable energy in Africa, for instance, the Nigerian energy mix, could further reduce reliance on fossil fuels. A country like Nigeria is endowed with ample renewable resources, which are replenishable. Hence, the country could count on that independence over the long term and close its energy deficiency gap.
- Employment Opportunities
This is one of the direct economic benefits renewable energy offers to any economy. More than 10 million people work in the renewable energy sector worldwide. The sector provides many different types of jobs, including positions in manufacturing, installation, engineering, sales, multimedia and communications, marketing and more. Renewable energy jobs are expected to continue to grow well into the future with the ongoing trend and discussions of climate change and the urgent need to transition to cleaner energy technologies.
- Reduction in Energy Costs
Switching to renewable energy is an excellent way for residential, commercial and industrial energy end-users to save money on their energy bills. Installing solar panels on your property allows you to generate your electricity, theoretically allowing you to reduce your energy bill to zero and paving the way for the choice to go off-grid. However, the amount you save depends on many variables, including where you live, consumption patterns, etc.
- Income for Landowners
Renewable energy also provides an additional source of income for rural landowners and farmers. According to data from the American Wind Energy Association (AWEA), wind farms in the U.S. provide around $222 million annually to rural landowners who host wind farms on their property. Farmers can also make money growing crops to be used as biofuels. Corn ethanol is currently the main avenue by which farmers participate in the energy sector, especially in the U.S., but other biofuels are starting to get more attention. There is also the prospect of landowners exploring agrivoltaics and optimally maximising land usage.
- Increased Property Value
Installing renewable energy equipment on your property can increase its value significantly. For instance, if you install solar panels on your house, its value rises for every amount you save on energy bills. Homeowners may recoup a significant amount of the cost of installing their solar modules when they sell their houses or collect higher rental fees from tenants who rent the property. In the real estate business, adding solar panels to your home may also help you sell it faster.
- Stable Energy Prices
The installation of renewable energy facilities requires a substantial upfront investment, but their operating cost drops substantially in the long run after installation. This is mainly because the need to purchase fuel is eliminated, lowering the electricity cost. It also implies that the price of generating electricity via renewable installation isn’t dependent on changes in the price of fuel. This, in turn, may lead to more stable energy prices over the long term.
- Climate Impacts Mitigation
In the Western part of the world, climate change has cost the U.S. economy about $240 billion annually over the last decade, according to a recent report from the Universal Ecological Fund. Nigeria experienced prolonged flooding in 2022 that affected thousands of investments, displaced residents from their settlements and cost the Nigerian government a lot of money for various interventions. These economic losses are outcomes as a result of extreme weather events, worsened air quality, rising sea levels and other effects. Switching from fossil fuels to renewables could help slow down climate change and avoid some of these potential economic losses.
Renewable energy looks set to be a large part of the future energy mix, along with other clean sources such as nuclear power. There are many other reasons to use less fossil fuel. It’s better for the environment and human health, and it also has many positive economic impacts and positive externalities. Concurrently, all these above-mentioned benefits make renewable energy an attractive investment option. This trend looks set to continue as governments of different countries strive to reach net zero.