Renewable energy is becoming increasingly cheaper than any new electricity capacity based on fossil fuels, according to a new report by International Renewable Energy Agency (IRENA) published Tuesday.
IRENA's Renewable Power Generation Costs in 2019 report showed that new renewable power generation projects now increasingly undercut existing coal-fired plants
More than half of the renewable energy capacity added in 2019 achieved lower power costs than the cheapest new coal plants, the report found.
"We have reached an important turning point in the energy transition. The case for new and much of the existing coal power generation is both environmentally and economically unjustifiable," Francesco La Camera, director-general of IRENA was quoted as saying in the report.
He asserted that renewable energy is increasingly the cheapest source of new electricity, offering “tremendous potential to stimulate the global economy and get people back to work.”
"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," La Camera said.
New solar photovoltaic (PV) and onshore wind power cost less than keeping many existing coal plants in operation on average.
Auction results show this trend accelerating and reinforcing the case to phase-out coal entirely, the report underlined.
“Renewable electricity costs have fallen sharply over the past decade, driven by improving technologies, economies of scale, increasingly competitive supply chains and growing developer experience. Utility-scale solar PV power has shown the sharpest cost decline at 82%, followed by concentrating solar power at 47%, onshore wind at 39% and offshore wind at 29%,” IRENA said.
Costs for solar and wind power technologies also continued to fall year-on-year. Electricity costs from utility-scale solar PV fell 13% in 2019, reaching a global average of 6.8 cents per kilowatt-hour, according to IRENA while onshore and offshore wind both declined by about 9%.
With these prices, renewable energy sources have become highly attractive as countries target economic recovery from COVID-19.
Next year, up to 1,200 gigawatts (GW) of existing coal capacity could cost more to operate than the cost of new utility-scale solar PV, according to IRENA.
Replacing the costliest 500 GW of coal with solar PV and onshore wind next year would cut power system costs by up to $23 billion every year and reduce annual emissions by around 1.8 gigatons of carbon dioxide (CO2), equivalent to 5% of total global CO2 emissions in 2019, the report showed.
It would also yield an investment stimulus of $940 billion, which is equal to around 1% of global gross domestic product.
"Renewable investments are stable, cost-effective and attractive offering consistent and predictable returns while delivering benefits to the wider economy. A global recovery strategy must be a green strategy," La Camera said, noting that renewables offer a way to align short-term policy action with medium- and long-term energy and climate goals
By Nuran Erkul Kaya