THOUGHTS

What are the Barriers to Successfully Implementing Renewable Energy?

Dec 19, 2017

Renewable energy has the potential to solve a majority of the energy shortage and demand issues around the world. And what is the cherry on top of the cake? That is, it’s extremely pocket-friendly. The benefits of renewable energy have attracted a large number of players to formulate new technologies by implementing clean energy sources. But the journey to success for renewable sources of generating energy is not as easy as it seems to be. Commercialization barriers faced by new technology, price distortions from existing subsidies, high transaction costs, and inadequate information are some of the few drawbacks that players seeking to venture into the renewable energy market face.  Let us discuss a few of them in detail:

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Building infrastructure

Renewable energy requires a considerable amount of initial investment, especially in the technology involved to harness energy from these sources. It also involves the cost for finding the apt sites to set up the infrastructure necessary for generating energy. For e.g., to generate wind energy, developers must first identify the most apt site with the appropriate flow of wind to set up the windmills. Also, the costs associated with the installation and maintenance of the infrastructure for renewable energy are also high.

Lack of information  

In most cases, the successful implementation of a product or a service depends greatly on the level of information that the customers have on them.  With renewable energy, many customers are still not fully aware of its applications and benefits. To add on, there are many false rumors making the rounds about renewable energy that adds to the customer’s confusion. For e.g., there is a common belief that solar and wind energy are not dependable because they are available only during the times sun is shining or the wind is blowing.

Comparatively smaller size of players

The companies and players undertaking clean energy projects are usually smaller in size compared to the established giants in the energy industry. Therefore, the resources and exposure available to these companies are much lesser. Also, they have limited ability to communicate with the customers and lesser say in regulatory and legislative proceedings, which makes it more difficult for them to establish themselves in the market.

High transaction costs

As mentioned earlier, players in the clean energy industry are less established and are smaller players. Therefore, proving their creditworthiness to banks or negotiating contracts becomes an expensive affair. Also, being small players becomes a major drawback in convincing residential customers to pay for renewables as it gets a little tricky to gain their trust unless it is an established brand.


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