Impact of environmental factors on the economic evaluation of renewable energy alternative generation

With the ever growing concern about global warming, environmental pollution, and the rising cost of fossil fuels like oil and coal, there is a greater interest in developing renewable energy sources to meeting growing energy demand. Additionally with the requirement for utilities to provide transmission access to independent power producers (IPP) to deliver their energy wherever needed, and the growing interest in distributed utility, it is most important to review the economic viability of these renewable energy sources as compared to traditional energy generation. This paper presents an economic evaluation method that includes the effect of environmental penalties associated with traditional generation and the tax credits for using renewable energy sources. Also it considers the costs associated with distribution and transmission losses and capital investment savings and the generation cost credit. It is recognized that the costs are utility dependent but this paper uses costs associated with a mean of the data from various utilities. This analysis should be most useful in developing similar economic evaluations for other types of energy sources.