Solar and wind less than half the cost of fossil fuels as price falls continue

The cost of both solar and wind energy continue to fall, with both technologies less than half the price of competing fossil fuels – based on a global average – and offering compelling socio-economic and environmental benefits.

A new report from the International Renewable Energy Agency (IRENA), Renewable Power Generation Costs in 2023, finds that renewable energy remains competitive even as fossil fuel prices have returned to more historically traditional cost levels.

Ssolar energy and onshore wind remain the cheapest renewable technology, with the levelized cost of electricity (LCoE) for solar falling by 90 per cent between 2010 and 2023.

The LCoE of solar PV has now fallen to $US0.044/kWh, or around $A0.064/kWh, and is beaten only by the more mature technology of onshore wind, which finished 2023 with an LCoE of $US0.033/kWh, or around $A0.048/kWh. (These are global averages).

When compared to fossil fuel and nuclear options, solar PV’s global costs in 2023 were 56 per cent lower, while onshore wind’s costs were 67 per cent less than fossil fuel and nuclear. This compares favourably to the respective technology costs in 2010, when solar PV was 414 per cent more expensive than fossil fuel and nuclear options.

“Renewable power remains cost-competitive vis-à-vis fossil fuels,” said Francesco La Camera, IRENA’s Director-General.

“The virtuous cycle of long-term support policies has accelerated renewables. In return, growth has led to technology improvements and cost reductions.

“The record growth of renewables in 2023 exemplifies this. Low-cost renewables represent a key incentive to significantly increase ambition and triple renewable power capacity by 2030, as modelled by IRENA and set by the UAE Consensus at COP28.”

For solar in particular, a variety of technological developments across the entire solar PV value chain have led to what IRENA describes as a “remarkable, sustained, and dramatic decline in the cost of electricity from utility-scale solar PV”.

Increased deployment of larger polysilicon factories, improved ingot growth methods, and the increase in the use of diamond wafering methods have helped improve the competitiveness of solar technology.

And, with the emergence and popularity of newer cell architectures and larger wafer sizes, IRENA expects the solar industry to see further LCoE reductions.

Cost declines in solar PV modules has contributed 45 per cent to the LCoE reduction of utility-scale PV costs, while inverters have contributed another 9 per cent. In fact, as seen below, cost declines across the entire value chain have led to solar PV’s new low LCoE of $US0.044/kWh.

The LCoE of virtually all renewable technologies have fallen in 2023, with year-on-year cost declines of 12 per cent for solar PV continuing that technology’s dominance.

This was driven by a 17 per cent decline in the global weighted average total installed cost, which fell from $US908/kW in 2022 to $US758/kW for projects commissioned in 2023 ($A1,312/kW to $A1,095/kW).

Since 2000, the total amount of renewable power deployed across the globe has saved up to $US409 billion in fuel costs for the power sector, or around $A590 billion.

“In the coming years, remarkable growth across all renewable energy sources is expected, giving countries great economic opportunities,” La Camera added.

“Our analysis indicates that solar PV and onshore wind will have the biggest impacts on the tripling of renewables.

“Thanks to low-cost renewables in the global market, policy makers have an immediate solution at hand to reduce fossil fuels dependency, limit the economic and social damage of carbon-intensive energy use, drive economic development and harness energy security benefits.”