Renewable power is cheaper than any new electricity capacity based on fossil fuels, a new report by the International Renewable Energy Agency (IRENA).
Renewable Power Generation Costs in 2019 shows that more than half of the renewable capacity added in 2019 achieved lower power costs than the cheapest new coal plants.
New solar photovoltaic (PV) and onshore wind power cost less than keeping many existing coal plants in operation, and auction results show this trend accelerating.
Next year, up to 1 200 gigawatts (GW) of existing coal capacity could cost more to operate than the cost of new utility-scale solar PV, the report shows.
Replacing the costliest 500 GW of coal with solar PV and onshore wind next year would cut power system costs by up to $23 billion every year and reduce annual emissions by around 1.8 gigatons (Gt) of carbon dioxide (CO2), equivalent to 5 percent of total global CO2 emissions in 2019. It would also yield an investment stimulus of $940 billion, which is equal to around 1 percent of global GDP.
“Renewable investments are stable, cost-effective and attractive offering consistent and predictable returns while delivering benefits to the wider economy,” Francesco La Camera, director-general of IRENA, said.
Renewable electricity costs have fallen sharply over the past decade, driven by improving technologies, economies of scale, increasingly competitive supply chains and growing developer experience.
Since 2010, utility-scale solar PV power has shown the sharpest cost decline at 82 percent, followed by concentrating solar power (CSP) at 47 percent, onshore wind at 39 percent and offshore wind at 29 percent.
Costs for solar and wind power technologies also continued to fall year-on-year. Electricity costs from utility-scale solar PV fell 13 percent in 2019, reaching a global average of 6.8 cents (USD 0.068) per kilowatt-hour (kWh). Onshore and offshore wind both declined about 9 percent, reaching USD 0.053/kWh and USD 0.115/kWh, respectively.
Recent auctions and power purchase agreements (PPAs) show the downward trend continuing for new projects are commissioned in 2020 and beyond.
Solar PV prices based on competitive procurement could average USD 0.039/kWh for projects commissioned in 2021, down 42 percent compared to 2019 and more than one-fifth less than the cheapest fossil-fuel competitor namely coal-fired plants.
Record-low auction prices for solar PV in Abu Dhabi and Dubai (UAE), Chile, Ethiopia, Mexico, Peru and Saudi Arabia confirm that values as low as USD 0.03/kWh are already possible.