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Renewables now cheaper than most existing competitors – IRENA
More than half of the renewable capacity added across the world last year achieved lower power costs than the cheapest new coal plants, according to new figures from the International Renewable Energy Agency (IRENA).
The data indicates that renewables have almost crossed a crucial price threshold, after which they are less costly than any new capacity from fossil fuels.
In a report, Renewable Power Generation Costs in 2019, IRENA analysts highlight that new onshore wind and solar PV power is cheaper than keeping many existing coal plants in operation. Recent auction results have shown that this trend is accelerating – thereby strengthening the case for phasing out coal altogether. Francesco La Camera, IRENA’s Director-General, has argued that the increasingly attractive economic case for renewables should push governments toward a green pandemic recovery.
‘Renewables offer a way to align short-term policy action with medium and long-term energy and climate goals,’ he said. ‘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.’
According to the report, up to 1,200 GW of existing coal capacity could cost more to operate than new utility-scale solar PV as early as next year. If the costliest 500 GW of coal were replaced with solar PV and onshore wind next year, power system costs could be reduced by up to $23bn every year and annual emissions would fall by around 1.8 Gt of CO2. This transition would also yield an investment stimulus of $940bn, or around 1% of global GDP.
Over the past decade, renewable electricity costs have fallen dramatically, largely thanks to improvements in technologies, increasingly competitive supply chains and expanded developer experience. Utility-scale solar PV has recorded the sharpest cost decline at 82%, followed by concentrating solar power at 47%, onshore wind at 39% and offshore wind at 29%.
In May, the International Energy Agency (IEA) predicted that the COVID-19 pandemic would lead to a reduction in renewable installations worldwide this year – the first annual decline in 20 years. However, growth in the sector is expected to resume in 2021 as delayed projects come online. Recovery will be smoother and faster still if policymakers show support for clean energy in their recovery packages. The world is set to add 167 GW of renewable power capacity this year, 13% less than in 2019, according to the IEA.