Renewable power is proving an increasingly cheaper option to fossil fuels, with more than half of renewable capacity added last year achieving lower power costs than the cheapest new coal plants, according to a report released this week by the International Renewable Energy Agency (IRENA).
The downward trend is accelerating this year, the agency said, with recent record-low prices being set at auctions in the UAE, Saudi Arabia, Chile, Mexico, Peru and Ethiopia. Next year, up to 1 200 GW of existing coal capacity could cost more to operate than the cost of new utility-scale solar PV, IRENA said.
Electricity costs from utility-scale solar PV fell 13 percent in 2019, reaching a global average of 6.8 cents (US$ 0.068) per kilowatt-hour (kWh), according to the Renewable Power Generation Costs in 2019 report. Onshore and offshore wind both declined about 9 percent, reaching US$0.053/kWh and US$0.115/kWh, respectively.
Replacing the costliest 500 GW of coal with solar PV and onshore wind next year would cut power system costs by up to US$23 billion every year and reduce annual emissions by around 1.8 gigatons (Gt) of carbon dioxide (CO2), equivalent to 5 percent of total global CO2 emissions in 2019. It would also yield an investment stimulus of US$940 billion – equivalent to around 1 percent of global GDP.
“Renewable energy is increasingly the cheapest source of new electricity, offering tremendous potential to stimulate the global economy and get people back to work,” said Francesco La Camera, Director-General of IRENA. “Renewable investments are stable, cost-effective and attractive offering consistent and predictable returns while delivering benefits to the wider economy.
“A global recovery strategy must be a green strategy,” La Camera added. “Renewables offer a way to align short-term policy action with medium- and long-term energy and climate goals. Renewables must be the backbone of national efforts to restart economies in the wake of the COVID-19 outbreak. With the right policies in place, falling renewable power costs, can shift markets and contribute greatly towards a green recovery.”
Renewable electricity costs have fallen sharply over the past decade, driven by improving technologies, economies of scale, increasingly competitive supply chains and growing developer experience. Since 2010, utility-scale solar PV power has dropped 82 percent in cost, followed by concentrating solar power (CSP) at 47 percent, onshore wind at 39 percent and offshore wind at 29 percent.