Nearly two-thirds of wind and solar projects built around the world in 2020 will be able to generate cheaper electricity than even the most competitive fossil fuel option according to a report from the International Renewable Energy Agency (Irena).
The report found that 62% of total renewable power generation added last year could undercut the cost of up to 800 gigawatts (GW) worth of coal plants due to the falling costs of new windfarms and solar panels. This would be almost enough to supply the UK’s electricity needs 10 times over.
According to the report, solar power costs fell by 16% last year, while the cost of onshore wind dropped 13% and offshore wind by 9%.
Amazingly, In less than 10 years, the cost of large-scale solar power has dropped by almost 85% while the cost of onshore wind has fallen by almost 56% and offshore wind has declined by almost 48%.
Francesco La Camera, Irena’s director general, said that the research done by the agency had proved the world was “far beyond the tipping point of coal”.
“Today renewables are the cheapest source of power. Renewables present countries tied to coal with an economically attractive phase-out agenda that ensures they meet growing energy demand, while saving costs, adding jobs, boosting growth and meeting climate ambition.”
To give a few examples of where renewables are cheaper; the cost of a new coal plant in Europe would be well above the cost of new wind and solar farms including mandatory carbon prices; renewable energy in the US could undercut between three-quarters and 91% of existing coal-fired power plants while in India renewable energy would be less expensive than between 87% and 91% of new coal plants.
The report says that if hundreds of existing coal plants were replaced with unsubsidised renewable energy sources, $32.3bn (£22.8bn) could be saved every year in energy system costs and about 3 gigatons of CO2 could be avoided annually.
To give an idea of the magnitude of the changes that will be needed in the future, the carbon saving from phasing out 800GW of coal power capacity would be the equivalent of removing 9% from the world’s energy-related emissions in 2020, or 20% of the carbon savings needed by 2030 to help limit global heating to 1.5C above pre-industrial levels.
The cost of renewable energy is predicted to continue to fall in the coming years. The report says that over the next two years three-quarters of all new solar power projects that have been competitively procured through auctions and tenders will be cheaper than new coal power plants, and onshore wind costs will be a quarter lower than the cheapest new coal-fired option.
The report said:
“The trend confirms that low-cost renewables are not only the backbone of the electricity system, but that they will also enable electrification in end uses like transport, buildings and industry and unlock competitive indirect electrification with renewable hydrogen.”
As a result of the findings of Irena’s report, countries are being urged to power past coal as renewables would bring cost savings of $156bn to emerging economies.
Francesco La Camera, Irena’s director general said:
“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.”
Wind and solar energy are set to gain cost competitiveness over fossil fuel and nuclear power in 2021. It is looking increasingly likely that it will be cheaper to add new wind and solar capacity in comparison to new fossil fuel power plants and nuclear power plants.