In 2020, 62% of total renewable power generation added globally was cheaper than the cheapest fossil alternative, finds a new report from the International Renewable Energy Agency (IRENA).
The ‘Renewable Power Generation Costs in 2020’ report explores how new renewables shifted in terms of costs, with a clear advantage for new-build technologies and an increasing advantage in terms of comparisons to already-operational fossil fuels like coal and gas, in power grids.
Between 2000 and 2020, renewables grew from 754 gigawatts (GW) to 2,799GW. Between 2019 and 2020, a record 261GW of renewables were added, with the deepest cost fall coming from concentrating solar power (CSP), of 16%. The drop 2019 to 2020 was 13%, 9% and 7% for onshore wind, offshore wind and solar PV respectively.
“Powering past coal in pursuit of a net-zero economy is no longer an expense. It is a huge saving”, IRENA said, in the release of the report. The numbers in the report show a rising catastrophe for existing coal plants, in the context of both falling renewable costs and rising coal operational costs. Globally, the report finds that more than 800GW of existing coal plants cost more to run than building new wind and solar in 2021.
“Retiring these plants would reduce power generation costs by up to USD 32.3 billion annually and avoid around 3 giga tonnes of CO2 per year, corresponding to 9 per cent of global energy-related CO2 emissions in 2020 or 20 per cent of the emissions reduction needed by 2030 for a 1.5°C climate pathway outlined in IRENA’s World Energy Transitions Outlook”.
IRENA’s calculations for this remarkable statistic include a USD $5 / MWh integration costs assumption.
“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”, said IRENA’s Director-General Francesco La Camera.
In general, wind and solar have both comfortably fallen below even the cheapest fossil fuel options, and concentrating solar power and offshore wind will likely both drop below the fossil fuel costs range in coming years, assuming continued developments.
“The data shows that without financial support, renewables are undercutting fossil fuels by a substantial margin in an increasing number of cases”, write the authors.
Australia is a global leader in cheap solar
Australia features in the report as a key player in falling solar PV costs, for utility-scale applications and rooftop applications both for commercial and residential use. Along with Brazil, China, France, Germany and India, it has seen some of the steepest falls in solar PV module prices, between 2013 and 2020, with a drop in costs of 66% (from 0.8 2020 USD $ per KW to 0.25). Installation costs for utility-scale solar are average in Australia, but operational costs (“levelised costs of energy” or LCoE) are relatively low. “Driven by a 16% fall in total installed costs between 2019 and 2020, the LCOE of utility scale PV in Australia declined 23% year-on-year, to reach USD 0.057/kWh during 2020. This put the 2020 LCOE of utility-scale PV in Australia at par with the United States”.
LCoE for rooftop solar is also made available in the report, with Australia being third-cheapest among all regions analysed for both commercial and rooftop applications.