More than half of renewables capacity added in 2019 achieved lower power costs than the cheapest new coal plants, according to a new study released by the International Renewable Energy Agency (IRENA).
Renewable energy is increasingly becoming cost-effective compared to any other energy generated using fossil fuels, adds the report.
Moreover, competitive energy generation costs make the investment in renewables highly attractive as countries target economic recovery from COVID-19.
Building, operating and maintaining a new solar photovoltaic (PV) and onshore wind energy plant now costs less than keeping an existing coal plant in operation, hence the need for the globe to accelerate the closure of coal-plants.
Since 2010, 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%.
Energy costs from utility-scale solar PV fell 13% in 2019, reaching a global average of 6.8 cents ($0.068) per kilowatt-hour. Onshore and offshore wind both declined by about 9%, reaching $0.053/kWh and $0.115/kWh, respectively.
Solar PV prices based on competitive procurement could average $0.039/kWh for projects commissioned in 2021, down 42% compared to 2019 and more than one-fifth less than the cheapest fossil-fuel competitor namely coal-fired plants
IRENA predicts that up to 1,200GW of existing coal capacity could cost more to operate than the cost of new utility-scale solar PV in 2021. Replacing the costliest 500GW of coal with solar PV and onshore wind could reduce power system costs by $23bn.
In addition, this would help reduce annual emissions by around 1.8 gigatons of carbon dioxide, equivalent to 5% of total global carbon emissions in 2019. It would also yield an investment stimulus of $940bn, which is equal to around 1% of global GDP.
The same amount of money invested in renewables capacity today produces more new capacity than it would have a decade ago. In 2019, twice as much renewable power generation capacity was commissioned than in 2010 but required only 18% more investment.
Francesco La Camera, Director-General of IRENA, said: “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.
“Renewable energy is increasingly the cheapest source of new electricity, offering tremendous potential to stimulate the global economy and get people back to work. 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.”
“Renewables offer a way to align short-term policy action with medium- and long-term energy and climate goals. 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.”
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