Majority of New Renewables Undercut Cheapest Fossil Fuel on Cost

Majority of New Renewables Undercut Cheapest Fossil Fuel on Cost

Countries urged to power past coal as new report confirms renewables would bring cost savings of USD 156 billion to emerging economies

The share of renewable energy that achieved lower costs than the most competitive fossil fuel option doubled in 2020, a new report by the International Renewable Energy Agency (IRENA) shows. 162 gigawatts (GW) or 62 percent of total renewable power generation added last year had lower costs than the cheapest new fossil fuel option.

Renewable Power Generation Costs in 2020 shows that costs for renewable technologies continued to fall significantly year on year. Concentrating solar power (CSP) fell by 16 percent, onshore wind by 13 percent, offshore wind by 9 percent and solar PV by 7 percent. With costs at low levels, renewables increasingly undercut existing coal’s operational costs too. Low-cost renewables give developed and developing countries a strong business case to power past coal in pursuit of a net-zero economy. Just 2020’s new renewable project additions will save emerging economies up to USD 156 billion over their lifespan. “Today, renewables are the cheapest source of power,” said IRENA’s Director-General Francesco La Camera. “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 USD 6 billion per year in emerging countries, relative to adding the same amount of fossil fuel-fired generation. 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 USD 32 billion every year.

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 out-competing them. Within ten years, 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. With record-low auction prices of USD 1.1 to 3 cents per kWh today, solar PV and onshore wind continuously undercut even the cheapest new coal option without any financial support.

 

Majority of New Renewables Undercut Cheapest Fossil Fuel on Cost

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