Encouraging the use of alternative sources of energy for electricity generation

Abstract

This dissertation evaluates the financial and economic feasibility of exploiting wind and solar energy to generate electrical energy in Malta. This will increase the electricity generation capacity in Malta, enabling it to meet the increase in electricity demand. Consumption trends show that as the economy continues to grow, the demand for electricity increases. Peak demands are getting nearer to the average available capacity, and thus the need for increased capacity is felt. Besides, Malta has committed itself that by 2010, 5% of all electricity generated would he produced from renewables. These factors call for the exploitation of renewable energy to generate electricity in Malta, should it prove feasible to do so. Scientific studies show that it is technically feasible to exploit the wind and the solar resource all year round to produce electricity in Malta. Calculating the cost per kWh of electricity produced from these renewables through the Life Cycle Costing Analysis, and comparing costs and benefits through a Cost Benefit Analysis, this study shows that electricity from wind energy is cheaper than that produced through conventional technologies, while electricity from solar energy is much dearer. Even when the negative externalities generated by the combustion of fossil fuels are taken into consideration, the exploitation of solar energy is not economically feasible. To promote renewables, the government should make use of the regulatory, educational, as well as the economic instruments at its disposal. Apart from increasing the electricity generation capacity, Maltese society would be financially and economically better off.