Around 162 GW or 62% of total renewable power capacity added last year had lower costs than the cheapest new fossil fuel option.
As much of 810 gigawatts (GW) capacity of the world’s existing coal-fired plants — 38 per cent of the total global energy capacity — now have higher operating costs than new utility-scale photovoltaics and onshore wind energy, a new report estimated.
Replacing this expensive coal power with renewables will save operators $32 billion a year and reduce annual carbon dioxide emissions by around three billion tonnes, according to the Renewable Power Generation Costs in 2020 report. The estimate was done by Internation Renewable Energy Agency (IRENA), a powerhouse of renewable energy data and policy discourse.
Around 162 GW or 62 per cent of total renewable power capacity added last year had lower costs than the cheapest new fossil fuel option.
The year 2020 was a record year for renewables deployment despite the novel coronavirus disease (COVID-19) pandemic, with 261 GW installed. The addition was almost 50 per cent higher than that made in 2019 and represented 82 per cent of the global new power capacity.
Photovoltaics supplied 127 GW of this new capacity in 2020, with 115 GW of wind power (105 GW onshore), geothermal (164 MW) and concentrating solar power or CSP (150 MW).
The wind capacity addition was almost twice of that created in 2019. Smaller contributions came from hydropower (12 GW) and bioenergy (two GW).
Between 2000 and 2020, renewables capacity grew more than three times, increasing by 754 GW to 2,799 GW. The growth was occasioned by advancements in technologies, consistent fall in component costs, cost-competitive supply distribution channels, learning by using and commercial-scale availability.
The cost of onshore wind generation fell by 13 per cent, concentrated solar power plummeted by 16 per cent, offshore wind by nine per cent in the last decade, denting coal’s running plant costs.
Levelised cost of electricity trends by technology, 2010 and 2020
(Source: IRENA Renewable Cost Database)
The cost range for generation of fossil fuel-fired power in G20 countries is estimated to be between $0.055 per kilowatt-hour (kWh) and $0.148/kWh. The lower bound represents new, coal-fired plants in China and is based on a 2020 report by International Energy Agency. $1 is equal to Rs 74.16.
Furthermore, In 2021, in non-OECD countries, these projects will reduce costs in the electricity sector by at least $6 billion, relative to the cost of adding the same amount of fossil fuel-fired generation. Two-thirds of these savings (a total of $3.9 billion in 2021) will come from onshore wind. Hydropower, with its higher capacity factors, contributes $1.3 billion to these savings, with utility-scale solar PV accounting for most of the remaining $0.7 billion.
In about 10 years, the cost of power produced from commercial solar PVs plummeted by 85 per cent, CSP 68 per cent, onshore wind 68 per cent and offshore wind 48 per cent, the report showed. This culminated in the most negligible cost auction costs of 1.1 to 3 cents/kwh, denting the prices of the cheapest coal generation deprived of financial assistance.
The learning curve for onshore wind and solar PV also has been falling faster than the rest of the renewables.
Renewables in all intent and purposes are the most affordable energy sources, highlighted the report. Countries should consider deploying these at scale to achieve the Paris Agreement targets and shield their economies from external shocks from fossil fuel markets.
Right policy incentives and financial incentives to derisk the sector as well as political support is the need of the hour as most countries have already signaled their commitments towards deploying renewables.
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