The decision to transition to renewable energy sources as an alternative to fossil fuels is often questioned due to concerns about financial viability, with high initial costs being the primary factor. However, new research published by EMBER shows that such investments, despite their upfront costs, bring significant economic benefits by reducing dependence on imported fossil fuels, stabilizing energy prices, and creating energy independence. In fact, the long-term profitability of renewables outweighs the short-term costs.
Dave Jones, Director of Global Insights at EMBER, illustrated this through a simple analogy, stating that fossil fuels are like renting a house, while renewables are like owning one—fossil fuels require ongoing payments, whereas renewables do not incur such recurring costs in the long run.
Almost 75 percent of the world’s population lives in countries that rely on fossil fuel imports. One example is Japan, which depends heavily on imports to meet 87 percent of its total energy demand. Following Japan are South Korea with 81 percent, Turkey with 69 percent, and Germany with 67 percent.
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Why Are Imports of Renewables More Profitable in the Long Run?
The study notes that the cost of importing solar panels can be recovered in just one year, compared to the cost of importing gas for power generation.
Specifically, importing one gigawatt of solar panels costs 100 million dollars and can generate 1.5 TWh of electricity per year—equivalent to the energy generated from importing gas. However, solar panels are a one-time purchase, whereas gas imports are a recurring expense.
Although there are additional installation costs for solar panels—around 0.50 dollars per watt—solar panels remain more cost-effective in the long term.
The report highlights that the world is already producing enough solar and wind energy that, if used to power electric vehicles, could replace global gasoline consumption.
In 2024, global gasoline consumption (the energy needed to power all gasoline vehicles) amounted to 14,042 TWh. However, internal combustion engines in gasoline-powered vehicles only convert about 24 percent of that energy into movement, with the rest mostly lost as heat. This means only a small fraction of gasoline energy actually powers the vehicles.
In contrast, the same year saw 4,625 TWh of energy generated from solar and wind. Electric vehicles are far more efficient than gasoline vehicles, capable of using up to 84 percent of the available energy. This means that the majority of energy from solar and wind can effectively power electric vehicles.
Although renewable energy sources have not yet fully replaced fossil fuels, data demonstrating their long-term profitability can encourage further investment. With continued investment and development, renewables have the potential to become a key alternative to fossil fuels.
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