A new report by the International Renewable Energy Agency (IRENA) states that over the past 10 years, clean energy has not only started seriously competing with fossil fuels but has significantly undercut them when new electricity generation capacity is required.
According to IRENA, concentrating solar power (CSP), offshore wind and utility‑scale solar photovoltaics all joined onshore wind in the range of costs for new capacity fired by fossil fuels, when calculated without the benefit of financial support.
The agency’s review shows that in 2020, a total of 162 GW of the renewable power generation capacity added had electricity costs lower than the cheapest source of new fossil fuel‑fired capacity. This was around 62% of total net capacity additions that year.
“In emerging economies, where electricity demand is growing and new capacity is needed, these renewable power generation projects will reduce costs in the electricity sector by at least $6 billion per year, relative to the cost of adding the same amount of fossil fuel‑fired generation,” the report reads.
The organization’s figures also show that since 2010, a cumulative total of 644 GW of renewable power generation capacity has been added globally with estimated costs that have been lower than the cheapest fossil fuel-fired option in their respective year. Prior to 2016, almost all of this was being contributed by hydropower, but since then it has increasingly included onshore wind and solar PV.
“Of the total, over the decade, 534 GW was added in emerging economies and could reduce electricity system costs in these by up to $32 billion in 2021 ($920 billion, undiscounted, over their economic lifetimes),” the report reads.
IRENA also looked at the results of competitive procurement of renewables through auctions or power purchase agreements and concluded that utility-scale solar PV projects that have won recent competitive procurement processes – and that will be commissioned in 2022 – could have an average price of $0.04/kWh, which is a 30% reduction compared to the global weighted-average levelized cost of electricity (LCOE) of solar PV in 2020 and is around 27% less ($0.015/kWh) than the cheapest fossil-fuel competitor, namely coal-fired plants.
The data also suggest that there is an increasing number of projects with very low electricity costs, at below $0.03/kWh.