Renewables energy continues to trump fossil fuels on costs, with the majority of new developments now producing cheaper energy, according to a new report by the International Renewable Energy Agency (IRENA).
Due to cheaper renewable energy, up to 800 gigawatts (GW) of existing coal-fired capacity could be replaced by new renewables capacity, which would save up to $32 billion a year and reduce carbon dioxide emissions by up to 3 gigatonnes.
“As costs for solar photovoltaic (PV) and onshore wind have fallen, new renewable capacity is not only increasingly cheaper than new fossil fuel-fired capacity but increasingly undercuts the operating costs alone of existing coal-fired power plants,” IRENA said in its annual renewable power generation costs report.
Phasing out coal burning is seen as key to meeting a Paris Agreement commitment to curb the global average temperature rise to below 2 degrees Celsius this century. The IEA forecast global coal demand would fall by about 8 percent in 2020.
Last year the global weighted-average levelised cost of electricity (LCOE) from new capacity. The study shows that costs for low carbon technologies continue to fall “significantly”. Concentrating solar power (CSP) dropped by 16 percent, onshore wind by 13 percent, offshore wind by 9 percent and solar PV by 7 percent.
The LCOE comprises the cost of generating a megawatt-hour of electricity, plus the upfront capital and development cost, financing costs, and operating and maintenance fees.
Between 2010 and 2020, the LCOE of utility-scale solar PV for new projects fell by as much as 85 percent, while the onshore wind was down 56 percent and offshore wind fell 48 percent.
In Europe new coal-fired power plant operating costs are well above the costs of new solar PV and onshore wind, including the cost of carbon prices. In the US and India, operating costs for new coal plants are lower than renewables because there is no significant price on carbon emissions.
However in the US between 77 percent and 91 percent of existing coal-fired capacity has operating costs estimated to be above the cost of new solar or wind power capacity, while in India, the figure is between 87 percent and 91 percent, the report said.