A new report published this week by the International Renewable Energy Agency has found that 77% of onshore wind projects and 83% of utility-scale solar PV projects set to be commissioned in 2020 will be cheaper than the lowest fossil fuel-fired generation prices.
The news has been heralded across the internet as a death-blow for the global fossil fuel industry. According to the new report from the International Renewable Energy Agency (IRENA), entitled Renewable Power Generation Costs in 2018, renewable energy is already the cheapest form of electricity in many parts of the world and, with prices expected to continue to fall, the cost advantage of renewable energy sources like wind and solar will only continue to increase.
Based on a comprehensive review of data from projects around the world — which saw IRENA analyze thousands of renewable energy projects and Power Purchase Agreements (PPAs) from across the globe — the new report is aimed at contributing to the international discussion on raising climate action worldwide. The conclusion of the report is that its findings serve to herald the strengthening of the business case for renewable energy and solidifies the role that renewable energy sources will play in the global energy transformation.
“Renewable power is the backbone of any development that aims to be sustainable,” said IRENA’s Director-General Francesco La Camera. “We must do everything we can to accelerate renewables if we are to meet the climate objectives of the Paris Agreement. Today’s report sends a clear signal to the international community: Renewable energy provides countries with a low-cost climate solution that allows for scaling up action.
“To fully harness the economic opportunity of renewables, IRENA will work closely with our membership and key partners to facilitate on-the-ground solutions and concerted action that will result in renewable energy projects.”
The report’s analysis showed that the costs for renewable energy technologies decreased to a record-low in 2018, with the global weighted-average cost of electricity from concentrating solar power (CSP) declining by 26%, bioenergy by 14%, solar PV and onshore wind by 13%, hydropower by 12%, and geothermal and offshore wind by 1%.
The report also showed that cost reductions, particularly for the solar and wind sectors, are set to continue through the next decade. Hidden somewhat by IRENA’s press release, but made abundantly clear in the report’s “Key Findings,” is the already mentioned fact that, “Among projects due to be commissioned in 2020, 77% of the onshore wind and 83% of the utility-scale solar PV project capacity in the IRENA Auction and PPA Database have electricity prices that are lower than the cheapest fossil fuel-fired power generation option for new generation.”
Onshore wind and solar PV costs between three and four US-cents per kilowatt-hour (US$0.03-4/kWh) are already possible in some areas of the world — depending on resources and enabling regulatory and institutional frameworks — with record-low auction prices for solar PV in Chile, Mexico, Peru, Sauri Arabia, and the United Arab Emirates seeing a levelized cost of electricity as low as US$0.03/kWh.
The report, available for free download here, also claims that “new solar PV and onshore wind are expected to increasingly cost less than the marginal operating cost of existing [coal-fired] power plants.” Specifically, “In 2020, the weighted average PPA or auction price for solar PV from projects in the IRENA database – USD 0.048 per kilowatt-hour (kWh) – is expected to be less than the marginal operating costs for around 700 gigawatts (GW) of operational coal-fired capacity at the same time.” Onshore wind, coming in at US$0.045/kWh, is expected to fall below the marginal operating costs of almost 900 GW of coal capacity potentially online in 2020.
The even better news is that these cost reductions are only expected to continue through the beginning of the next decade, with IRENA making the bold claim that “Expectations about future cost reductions for solar PV and onshore wind are once again being continually beaten by lower values as new data becomes available.”
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