Page 22 - Energize September 2022

NEWS

Renewable power remains cost-competitive

amid fossil fuel crisis

Information from IRENA

osts for renewables continued to fall in 2021 as supply chain
challenges and rising commodity prices have yet to show their full
Cimpact on project costs. The cost of electricity from onshore wind
fell by 15%, offshore wind by 13% and solar PV by 13% compared to 2020.
A new report, Renewable Power Generation Costs in 2021, published
by the International Renewable Energy Agency (IRENA), shows that almost
two-thirds or 163 GW of newly installed renewable power in 2021 had
lower costs than the world’s cheapest coal-fired option in the G20. IRENA
estimates that, given the current high fossil fuel prices, the renewable Figure 1: Completion year for projects, by technology
power added in 2021 saves around US$55-billion from global energy
generation costs in 2022.

Click here to watch a short video summary

IRENA’s new report confirms the critical role that cost-competitive
renewables play in addressing today’s energy and climate emergencies
by accelerating the transition in line with the 1,5°C warming limit and Figure 2: Change in global weighted levelised cost of electricity by
technology, 2020-2021
the Paris Agreement goals. Solar and wind energy, with their relatively
short project lead times, represent vital components of countries’ efforts
to swiftly reduce, and eventually phase out, fossil fuels and limit the
macroeconomic damages they cause in pursuit of net zero.
“Renewables are by far the cheapest form of power today,” Francesco
La Camera, Director-General of IRENA said. “2022 is a stark example of just
how economically viable new renewable power generation has become.
Renewable power frees economies from volatile fossil fuel prices and
imports, curbs energy costs and enhances market resilience – even more
Figure 3: The weighted average LCOE of utility scale solar PV compared
so if today’s energy crunch continues.” to fuel and CO2 cost only for fossil gas in Europe, 2010-2022
“While a temporary crisis response might be necessary in the current
situation, excuses to soften climate goals will not hold mid-to-long-term. January and May 2022, the generation of solar and wind
Today’s situation is a devastating reminder that renewables and energy power may have saved Europe fossil fuel imports in the
saving are the future. With the COP27 in Egypt and COP28 in the UAE magnitude of no less than US$50-billion, predominantly
ahead, renewables provide governments with affordable energy to align fossil gas.
with net zero and turn their climate promises into concrete action, with As to supply chains, IRENA’s data suggests that not all
real benefits for people on the ground,” he added. materials cost increases have been passed through into
Investments in renewables continue to pay huge dividends in 2022, as equipment prices and project costs yet. If material costs
highlighted by IRENA’s costs data. In non-OECD countries, the 109 GW of remain elevated, the price pressures in 2022 will be more
renewable energy additions in 2021 that cost less than the cheapest new pronounced. Increases might however be dwarfed by the
fossil fuel-fired option, will reduce costs by at least US$5,7-billion annually overall gains of cost-competitive renewables in comparison
for the next 25 to 30 years. to higher fossil fuel prices.
High coal and fossil gas prices in 2021 and 2022 will also profoundly
reduce the competitiveness of fossil fuels and make solar and wind even Click here to read the full report Renewable
more attractive. With an unprecedented surge in European fossil gas prices Power Generation Costs in 2021.
for example, new fossil gas generation in Europe will increasingly become
un-economical over its lifetime, increasing the risk of stranded assets. Find an interactive infographic here.
The European example shows that fuel and CO 2 costs for existing gas
plants might average four to six times more in 2022 than the lifetime Contact Damian Brandy, IRENA, dbrandy@irena.org,
cost of new solar PV and onshore wind commissioned in 2021. Between https://www.irena.org

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