Renewable Energy Dominates Fossil Fuels: Irena Report Reveals Unprecedented Cost Competitiveness

2023-08-29 18:01:37

The competitiveness of renewables accelerated further last year, boosted by the fossil fuel price crisis, despite cost inflation, says the International Renewable Energy Agency (Irena).

According to a report published on Tuesday, about 86% (187 gigawatts) of the renewable capacity commissioned in 2022 had a lower cost than electricity generated from fossil fuels (coal, gas).

Last year, the global electricity sector directly saved with renewables (solar, wind, hydro, etc.) 520 billion dollars on the cost of fuels thanks to the production sites installed in the world since 2000.

In addition to these direct savings, the reduction in CO2 emissions and air pollutants translates into “substantial” economic benefits, the report adds.

Without the rollout achieved over the past two decades, the economic repercussions of rising fossil fuel prices in 2022 would have been far more severe, “even exceeding the ability of many governments to mitigate them,” the report said.

For the director general of this intergovernmental agency responsible for supporting the energy transition, Francesco La Camera, “the year 2022 is a turning point in the deployment of renewable energies. Their competitiveness in terms of costs has indeed never been greater, despite continued inflation in the cost of commodities and equipment”.

“The regions most affected by this historic price shock have shown remarkable resilience in large part due to the massive increase in solar and wind power over the past decade,” he notes.

The weighted average cost of electricity fell in 2022 by 3% for photovoltaic, 5% for onshore wind, 13% for bioenergy and 22% for geothermal energy. Offshore wind and hydro costs alone increased by 2% and 18%, due to a lower share of China in offshore wind deployment and cost overruns in some large projects hydroelectric.

Since 2010, the global weighted average cost of solar PV electricity has fallen by 89% to $0.049/kWh, almost a third less than the cheapest fossil fuel internationally. For onshore wind, the decline was 69% to $0.033/kWh in 2022, just under half the value of the cheapest option in fossil fuels.

To stay below 1.5°C of pre-industrial warming, the world will still need to add an average of 1,000 GW of renewable energy per year until 2030, more than three times the 2022 levels. emphasizes Irena.

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