Renewable energy continues to strengthen its cost advantage over fossil fuel options, with the main technologies seeing significant cost reductions year-on-year, according to a report from the International Renewable Energy Agency (IRENA). The share of renewable energy that achieved lower costs than the most competitive fossil fuel option doubled last year, with 162 gigawatts (GW), 62 per cent of total renewable power generation added last year, having lower costs than the cheapest new fossil fuel option.
Costs for concentrating solar power (CSP) fell by 16 percent, with onshore wind costs dropping 13 percent, offshore wind 9 percent and solar PV 7 percent, according to the report, Renewable Power Generation Costs in 2020. Just 2020’s new renewable project additions will save emerging economies up to US$156 billion over their lifespan, according to IRENA.
“Today, renewables are the cheapest source of power,” IRENA Director-General Francesco La Camera said in a statement. “Renewables present countries tied to coal with an economically attractive phase-out agenda that ensures they meet growing energy demand, while saving costs, adding jobs, boosting growth and meeting climate ambition. I am encouraged that more and more countries opt to power their economies with renewables and follow IRENA’s pathway to reach net zero emissions by 2050.”
“We are far beyond the tipping point of coal,” La Camera continued. “Following the latest commitment by G7 to net-zero and stop global coal funding abroad, it is now for G20 and emerging economies to match these measures. We cannot allow having a dual-track for energy transition where some countries rapidly turn green and others remain trapped in the fossil-based system of the past. Global solidarity will be crucial, from technology diffusion to financial strategies and investment support. We must make sure everybody benefits from the energy transition.”
The renewable projects added last year will reduce costs in the electricity sector by at least US$6 billion per year in emerging countries, relative to adding the same amount of fossil fuel-fired generation, according to IRENA’s calculations. Two-thirds of these savings will come from onshore wind, followed by hydropower and solar PV. Cost savings come in addition to economic benefits and reduced carbon emissions. The 534 GW of renewable capacity added in emerging countries since 2010 at lower costs than the cheapest coal option are reducing electricity costs by around USS32 billion every year, IRENA said.
2010-2020 saw a dramatic improvement in the competitiveness of solar and wind technologies with CSP, offshore wind and solar PV all joining onshore wind in the range of costs for new fossil fuels capacity, and increasingly outcompeting them. Within 10 years, IRENA estimates the cost of electricity from utility-scale solar PV fell by 85 percent, that of CSP by 68 percent, onshore wind by 56 percent and 48 percent for offshore wind.