Pay now or pay later: Managing the necessary (but high) costs of renewable energy

There is still plenty of room for debate about how quickly society should adopt more renewable energy sources and which sources (solar, wind, electric vehicles, nuclear, hydrogen or others) should be used.

However, no one disputes this: they come at a huge price.

These costs fall into three categories – development, implementation and regulation – all of which can slow (if not stop) the transition to renewable energy.

Dennis Toft, chair of the environmental law practice at Chiesa Shahinian & Giantomasi, explained this during the recent “Let’s Talk Climate Change” panel at CSG Law in Roseland.

“With green energy, you have to consider the cost,” he said.

Toft mentioned just a few: solar fields in landfills (which is already being implemented), recovering natural gas from landfills, electric vehicles, food waste composting, offshore and onshore wind farms, hydrogen, and even small modular nuclear energy.

“There are great projects and great ideas out there, but the first thing we need to tackle is removing the regulatory hurdles associated with these projects,” he said.

Toft emphasizes that he is not against regulation. In fact, he has long pushed for the necessary safeguards. Working with them requires capital.

The good thing: there are funding sources available.

“One of the great things that happened under the Inflation Control Act is the tax credits that were made available for green energy,” he said. “Some customers used it, but it wasn’t enough.”

Toft said walking customers through the entire process can be a challenge. IRS rules don’t necessarily reflect the reality of where the tax break should be applied, he said.

The market, Toft said, is adapting quickly. For example, it is now possible to obtain insurance for tax relief purposes.

Toft wants to see more.

“We need to think about how else can we encourage these projects to continue to make the costs more manageable?” he said.

Some of those costs will have to be borne by consumers, Toft said.

“Everyone is talking about wind, and wind is certainly part of the solution, but it comes at a cost,” he said. “Everyone is afraid that electric cars will run out of power. We need to prepare the network infrastructure. It costs. All these different things are part of the equation.

“As ratepayers and ratepayers, we need to understand that if we want to maintain what we have and prevent things from getting worse, we need to be prepared to pay the rates necessary to pay for wind and solar energy.”

Covering those costs is not an option, said Doug O’Malley, New Jersey’s environmental director.

He pointed to a recent study that found the cost of dealing with climate change in the next generation would be $100 trillion, or three times the current global economy.

“If we don’t take action, we will pay much more later,” he said.