Can Renewables Hold Their Price as Fossil Fuels Get Expensive?

As gas prices rose, we all started salivating at the prospect of renewable, made-from-waste biofuels that were cheaper than dyno-diesel. Unfortunately, as soon as the price did drop below the average forecourt price, the co-op was immediately inundated with new bargain hunting members and the pumps were drained dry. When prices switched back, the cheap fuel lovers disappeared. The result, unfortunately, was a policy to peg the co-op's prices as always being just above those of regular diesel.

But all this does not mean that renewables must always remain more expensive than so-called conventional energy. As demand rises, supply is constrained, but that should lead to more investment in more supply. As production capacity increases accordingly, we should then see economiesof scale ensuring cheaper and cheaper renewables, even as gas and coal prices keep going up.

Some folks are arguing, for example, that solar could reach grid parity as soon as 2015. (Others are arguing that focusing on grid parity is entirely the wrong question.)

That's why the announcement from Good Energy—the 100% renewable energy provider that was previously in a public row with wind pioneers Ecotricity—that they would maintain a winter price freeze as other utilities hike their rates had me pricking my ears:

"The move to hold prices down demonstrates Good Energy's commitment to ensure that green energy is more accessible. The 100% renewable electricity supplier hopes this will encourage consumers to switch to greener energy as the price differential with many fossil-fuel-based suppliers is reduced, especially since three of the Big 6 have recently announced price hikes."

Whether or not this price freeze represents a permanent narrowing of the gap between conventional electricity and newer, less polluting sources—or whether it is a clever, but temporary, marketing move to grab more customers and harness the outrage at price rises—remains to be seen. But anything that helps drive customers, and investment, into the development of wind, solar and tidal energy can only be a good thing in my book. I'm just hoping those customers stick around if prices rise again in the future.