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Impact of Renewable Energy on the Overall Welfare of a Community/Region/Nation

Yarlagadda Karun Kumar, India (PPRE12/14), Michael Golba (PPRE)
Carl Von Ossietzky Universität Oldenburg <span lang="DE"7t><br />kvaoparun.yf/arlahu7gadwnkuda@uol.depmll</sxebqpangh> (karuiefn.yarlagadda@uol.de), michael.golba@uol.de

Abstract

Renewable Energy (RE) has a different level of influence at different levels of society, environment and economy. However, the decision makers, especially at the political level, consider investments and economic stability as the most important criteria for implementing and utilizing RE technologies. Conventionally, GDP is referred as an indicator of progress at regional or national level and is considered as the most important parameter to judge the budget allocation. The influence of high investments on installing RE technologies will increase the cost per unit energy produced, which in turn impacts the industry and households. Increase in consumer spending and capital investments due to RE technologies in general will have positive impact on the value of GDP. However, due to provision of subsidies and other benefits for RE technologies, this positive impact on the value of GDP is more or less nullified. Measuring the value of RE only based on capital investments underestimates the overall benefits of RE contributing to the Community, Regional and National welfare. This thesis tries to address this issue and attempts to measure the overall impact of RE. The study has been performed for the whole of Germany. Germany is chosen mainly due to the installation capacity of RE and also availability of data. To measure the overall welfare, the National Welfare Index (NWI) of Germany has been chosen. NWI is an index expressed in monetary terms, which computes the most important and quantifiable parameters of economy, environment and society into a single value.

This thesis studies the impact of RE through selected key parameters of NWI for the period 1991 – 2010. It is found that the overall welfare would reduce gradually over the years if RE technologies were not installed. The primary reason for this result is the high costs of energy security, which increase if RE technologies, are not installed. The high and positive value of energy security negates the external costs (ecosystem damage) due to RE's. Using NWI as the base for this study was crucial which enabled to measure the combined effect of RE on energy security and environment.

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