All renewables to compete on cost with fossil fuels by 2020, says IRENA
A fresh report has predicted that all renewable energy technologies will compete, and even undercut, fossil fuels on price within the next two years.
The cost of solar and onshore wind will plummet dramatically by 2020, according to cost analysis from the International Renewable Energy Agency (IRENA), with solar PV costs expected to halve in that time.
By then, both onshore and solar projects could be delivering electricity for around three cents/kWh or less, which is “significantly” cheaper than current fossil fuel power.
Other renewable technologies such as bioenergy, geothermal and hydropower have competed with power from fossil fuels in the past year, notes IRENA, thanks to competitive procurement practices and the emergence of a large base of experienced project developers vying for market opportunities.
“This new dynamic signals a significant shift in the energy paradigm,” said IRENA director general Adnan Z. Amin.
“These cost declines across technologies are unprecedented and representative of the degree to which renewable energy is disrupting the global energy system.”
‘Smart economic decision’
The average cost of electricity from onshore wind is said to have fallen by 23% in the last seven years, with projects now routinely commissioned at around four cents/kWh. Since 2010, the average cost of utility-scale solar PV electricity has dropped by 73% to 10 cents/kWh.
Recent auction results are signalling that offshore wind and concentrating solar projects commissioned between 2020-22 will cost in the range of 6-10 cents/per kWh, supporting accelerated deployment across the globe.
This compares with current cost spectrum for fossil fuel power generation, which ranges from 5-17 cents/kWh.
“Turning to renewables for new power generation is not simply an environmentally conscious decision, it is now – overwhelmingly – a smart economic one,” Amin continued.
“Governments around the world are recognizing this potential and forging ahead with low-carbon economic agendas underpinned by renewables-based energy systems. We expect the transition to gather further momentum, supporting jobs, growth, improved health, national resilience and climate mitigation around the world in 2018 and beyond.”
The economic case for the low-carbon transition is being realised by some of the world’s biggest corporates. Just last week, online retailer Amazon had a 964 kWp rooftop solar system installed at a new logistics centre in central Italy, as part of the company’s mission to source 100% renewable electricity.
Tesla, meanwhile, has reportedly begun production and manufacturing of its solar roof tiles at its Buffalo, New York, facility. The glass tiles were unveiled in Autumn 2016, and are designed to blend with regular shingle.
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