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, reads a new report by the International Renewable Energy Agency (IRENA).
New solar and wind projects are increasingly undercutting even the cheapest and least sustainable of existing coal-fired power plants, according to Renewable Power Generation Costs in 2020.
IRENA analysis suggests 810 GW of existing coal-fired capacity (out of 2,125 GW) has operating costs higher than new utility-scale solar PV and onshore wind, including USD 0.005/kWh for integration costs. These power plants are located in Bulgaria (3.7 GW), Germany (28), India (141 GW), US (149 GW), and the rest of the world (488 GW).
La Camera: There is no room for these coal assets to be part of the energy future
Replacing these coal-fired plants would cut annual system costs by USD 32 billion per year and reduce annual CO2 emissions by around 3 Gigatonnes of CO2.
“This would provide 20% of the emissions reduction needed by 2030 for the 1.5°C climate pathway outlined in IRENA’s World Energy Transitions Outlook. There is no room for these coal assets to be part of the energy future, retrofitting with carbon capture and storage would only increase costs,” said IRENA’s Director-General Francesco La Camera.
Renewables present countries tied to coal with an economically attractive phase-out agenda
“Renewables present countries tied to coal with an economically attractive phase-out agenda that ensures they meet growing energy demand, while saving costs, adding jobs, boosting growth and meeting climate ambition.”
Since 2010, globally, a cumulative total of 644 GW of renewable power generation capacity has been added with estimated costs that have been lower than the cheapest fossil fuel-fired option in each respective year. In emerging economies, the 534 GW added at costs lower than fossil fuels, will reduce electricity generation costs by up to USD 32 billion this year, the report reads.
The cost of electricity from utility-scale solar PV fell by 85 percent
Renewable power generation costs have fallen sharply over the past decade, driven by steadily improving technologies, economies of scale, competitive supply chains and improving developer experience.
According to the report, the data from the IRENA Renewable Cost Database shows cost declines continued in 2020, with the cost of electricity from utility-scale solar photovoltaics (PV) falling 7% year-on-year, offshore wind fell by 9%, onshore wind by 13% and that of concentrating solar power (CSP) by 16%.
Between 2010 and 2020, the cost of electricity from utility-scale solar photovoltaics (PV) fell 85%, followed by concentrating solar power (CSP; 68%), onshore wind (56%) and offshore wind (48%). The last decade has seen CSP, offshore wind and utility-scale solar PV all join onshore wind in the cost range for new capacity fired by fossil fuels, when calculated without the benefit of financial support.
Indeed, the trend is not only one of renewables competing with fossil fuels, but significantly undercutting them, IRENA said.