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Most Renewables Now Cheaper Than Cheapest Coal

The idea that it costs a premium to go green and clean is long expired in the electricity industry. A new report from the International Renewable Energy Agency (IRENA) indicates that most of the renewable energy installed in G20 countries last year had lower costs than the absolute cheapest coal power in the world.

Despite supply chain challenges and economic inflation, renewable energy costs dropped strongly. Utility-scale solar PV costs dropped 13%, offshore wind energy costs dropped 13%, and onshore wind energy costs dropped 15% compared to the year before (2020).

Average utility-scale solar PV costs (LCOE) got down to 4.8¢/kWh, onshore wind energy costs got down to 3.3¢/kWh, and offshore wind energy costs got down to 7.5¢/kWh. (Concentrated solar thermal energy costs rose 7% to 11.4¢/kWh.)

Image courtesy of IRENA.

“Almost two-thirds — or 163 gigawatts (GW) — of newly installed renewable power in 2021 had lower costs than the world’s cheapest coal-fired options in the G20,” IRENA states, “confirming the critical role of cost-competitive renewables in addressing today’s energy and climate crises.

“The global weighted average LCOE of new utility-scale solar PV and hydropower was 11% lower than the cheapest new fossil fuel-fired power generation option in 2021, and 39% lower for onshore wind.”

Image courtesy of IRENA.

Geothermal energy and bioenergy, on average, remained a bit more expensive than the cheapest fossil fuel power, and thus more expensive than wind and solar power.

Looking longer term, the cost drops are of course much larger. From 2010 to 2021, utility-scale solar PV costs dropped 88%, onshore wind power costs dropped 68%, concentrated solar thermal power costs dropped 68% as well, and offshore wind power costs dropped 60%.

Image courtesy of IRENA.

With electricity savings from renewable energy sources, IRENA estimates that people around the world could save $55 billion in 2022.

Enjoy this smart chart for more fun numbers and facts on the renewable energy story:

“The lifetime cost per kWh of new solar and wind capacity added in Europe in 2021 will average at least four to six times less than the marginal generating costs of fossil fuels in 2022,” IRENA states.

Despite all of this good news, the prices of things have gone up globally in the past year (a lot) and IRENA forewarns that prices could show a slight rise in 2022. Of course, fossil fuel power projects are not immune from the rising costs either — “extremely high fossil fuel prices mean that any plausible scenario for renewable cost increases are outweighed by the extensive economic benefits of new renewable capacity overall.” In fact, fossil fuel costs have risen so much that renewable energy is even more logical than normal for new power capacity. “If ever there was a year to dramatically increase the deployment of renewable power generation, it is 2022. Renewables will reduce fossil import bills and average electricity system costs, and lessen the damaging impacts of high electricity prices on consumers and industry. This year’s fossil fuel price crisis demands a response; renewables and energy efficiency provide the answer, bringing unprecedented benefits for consumers, the environment and the global economy.”

Image courtesy of IRENA.

Many more stats and facts can be found in the 204-page IRENA report.

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