According to a report by the International Renewable Energy Agency (IRENA) cited by Reuters, beginning 2020, electricity generated by solar PV and onshore wind is set to become consistently cheaper than the most cost-effective fossil fuel alternative, without subsidies.
In essence, more than 80 percent of solar PV and 75 percent of onshore wind power deployments to be commissioned next year will be cheaper than the cheapest new oil, natural gas, or coal-fired sources as per the report.
This report has a pretty wide scope, having been compiled from IRENA’s own members, governments, consultancies, industry groups, business journals, auctions, and tenders. IRENA’s membership includes research institutes, project developers, utilities, and power companies across 160 countries, all of which contribute data for its Renewable Cost Database.
According to the IRENA report, the global weighted average cost of power generated using solar energy fell another 26 per cent last year compared to the previous year. Bioenergy costs declined 14 per cent, solar PV and onshore fell by 13 per cent, hydropower was 12 per cent lower, while offshore wind was 1 per cent cheaper last year.
IRENA estimates that the global average cost of electricity for solar PV will clock in at $0.055/kWh in 2020, then fall another 13 per cent to $0.048/kWh in 2021. As for onshore wind, corresponding estimates are $0.049/kWh and $0.045/kWh in 2020 and 2021, respectively.
Over the past decade, renewable energy has experienced transformative changes, enabling it to play a very significant role in our energy industry. The solar industry has in particular been a standout performer thanks to remarkable price declines by solar PVs and increasing grid flexibility.
The future of renewable energy is looking brighter than ever. Energy company BP has projected that solar and other renewables will supply 30 per cent of the world’s electricity needs by 2040 and up to 50 percent in regions such as Europe. That’s an upgrade from the firm’s last year forecast of 25 percent by 2040.
The repercussions for the global economy are bound to be enormous. Other than the potential to stop climate change in its tracks, renewable energy will likely negate at least some of the nearly $300 billion in annual energy subsidies provided by the world’s governments.