Presently, there is rapid growth in Technology advancement. Developed countries are searching for new alternative energy sources to minimize the pressure on natural sources like gas, uranium, oil, coal, etc. However, natural sources of energy are inadequate and expensive, which also contributed heavily to greenhouse gas emissions. Developing countries like Nigeria are also trying to exploit different renewable energy sources like solar energy, hydropower, wind energy, bioenergy, etc. to accomplish their increasing demand and also to eradicate the energy crisis Nigeria has been experiencing due to insufficient electricity generation. This paper analyses the importance of renewable sources, the challenges and the benefits. This paper also analyses how renewable energy can be accepted as a perfect solution for economic development.