In many countries, economic growth is a result of proper management of resources and utilization of local technologies to cater for the needs of citizens. Energy is one of the variables in economic growth that are key in ensuring important projects run by the government are successful. More importantly, the supply of energy at affordable rates spurs economic growth at the grass root level and this translates to the development of local industries. Andrew Charlton is an economics expert and today he shares some insight into the way investing in renewable energy can spur economic growth.
Access to affordable energy
Renewable energy is cheaper to produce and distribute compared to thermal electricity. This means the cheap cost of production and distribution is transferred the end user. The fact that renewable energy is cheaper also means more people can afford it, and thus local industries that require energy to run are able to embrace this opportunity. As the cost of producing renewable energy continues to drop, the manufacturing sector will benefit the most due to lowered costs of production as well as lower energy and pollution taxes. This will see an expansion in the manufacturing sector as running costs get cheaper.
With the growth of different industries as pointed out above, there will also be demand for increased workforce. Renewable energy requires a bit more labor than fossil fuel, so most of the jobs that will be created will be in the energy production industry itself. This also includes peripheral jobs that will be created in industries that will help to maintain related systems and equipment. As experts will explain, increased industrialization and job creation leads to the generation of additional disposable income within the household level, and this stimulates the economy.
Supporting technologies like renewable energy production requires a strong input in innovation. Skills and technologies that can compete at the international level will be required as the local industries strive to compete with global innovators in the energy sector. Embracing renewable energy will inspire a growth in the usage of local resources in production and will serve to encourage young innovators to come up with ideas that can help to develop the energy sector further. To ensure there is effective distribution of the energy, local industries will need channels and these can only be made through innovation.
Development of industries
To broaden the industry base, every government should encourage the use of renewable energy in the production process. Issuing incentives to industries that use renewable energy might be a good start. What follows after many industries have embraced renewable energy is an increase in the demand for machinery that are designed to make energy production and distribution possible. There are unlimited solutions when it comes to energy production through renewable methods, so different industries will come up to fill this gap to ensure there are many ways of energy production that are clean and affordable to majority of users.
Many local industries can take advantage of the demand for production of equipment for solar and wind power collection. Additionally, there is also need to have storage and distribution mechanisms, which means this is another opportunity to boost the production of equipment in related fields that will serve to grow the production and distribution of renewable energy.
Of course amid all the demand for renewable energy is the need for support from the government. Such support would be in the sense that local industries that have interest in renewable energy should be offered the technical and financial support they require to establish themselves well in the industry.