The International Renewable Energy Agency (IRENA) said on Monday that renewables remained competitive despite fossil fuel prices returning closer to historical cost levels.
According to the IRENA’s Renewable Power Generation Costs in 2023 report released on Monday at the Global Renewables Summit during the UN General Assembly, utility-scale renewable projects had lower costs than their fossil fuel-fired alternatives, with renewable power capacity additions setting a record of 473GW in 2023, 81% or 382GW of newly commissioned.
IRENA’s director-general, Francesco La Camera, said renewable power remained cost-competitive vis-à-vis fossil fuels.
“The virtuous cycle of long-term support policies has accelerated renewables. In return, growth has led to technology improvements and cost reductions,” La Camera said.
“Prices for renewables are no excuse any more, on the contrary. The record growth of renewables in 2023 exemplifies this. Low-cost renewables represent a key incentive to significantly increase ambition and triple renewable power capacity by 2030, as modelled by IRENA and set by the UAE Consensus at COP28.”
The intergovernmental organisation mandated to facilitate co-operation, advance knowledge, and promote the adoption and sustainable use of renewable energy report shows that after decades of falling costs and improving technology particularly for solar and wind, the economic, social, development and environmental benefits of renewable deployment were now uniquely compelling.
With a spectacular decline in costs to around four US cents per kilowatt-hour in just one year, solar photovoltaics (PV) global costs in 2023 were 56% lower than fossil fuel and nuclear options. Overall, the renewable power deployed globally since 2000 has saved up to $409 billion in fuel costs in the power sector.
According to the report, the tripling renewables require 11.2TW of global renewable capacity by 2030, adding an average of 1 044GW of new capacity annually throughout 2030. Some 8.5TW would come from solar PV and onshore wind alone according to IRENA’s World Energy Transitions Outlook.
Most importantly, it said the tripling goal must be accompanied by other enablers of the energy transitions, such as storage, which project costs declined 89% between 2010 and 2023 and has increasingly been used to accelerate solar and wind while addressing grid infrastructure challenges.
La Camera said in the coming years, remarkable growth across all renewable energy sources was expected, giving countries great economic opportunities.
“Our analysis indicates that solar PV and onshore wind will have the biggest impacts on the tripling of renewables,” La Camera said.
“Thanks to low-cost renewables in the global market, policymakers have an immediate solution at hand to reduce fossil fuels dependency, limit the economic and social damage of carbon-intensive energy use, drive economic development and harness energy security benefits.”
Last year, the global weighted average cost of electricity from newly commissioned renewable projects across most technologies fell, for solar PV by 12%, for onshore wind by 3%, for offshore wind by 7%, for concentrating solar power (CSP) by 4% and for hydropower by 7%.
In non-OECD economies where electricity demand was growing and new capacity was needed, renewable power generation projects with lower costs than fossil fuel-fired equivalents for their country and region would significantly reduce electricity system costs over the life of their operation.
In 2023, Asia registered the highest cumulative savings in the period between 2000-2010, estimated at $212bn, followed by Europe with $88bn and South America with an estimated U$53bn.
IRENA said renewable power generation has become the default source of least-cost new power generation.
It said policymakers and stakeholders should focus on ensuring that policies, regulations, market structures, support instruments, de-risking mechanisms, and financing were all rapidly aligned with the tripling target and submitted in the next round of Nationally Determined Contributions (NDCs) to the Paris Agreement in 2025.
According to the International Energy Agency, manufacturing and other industrial users accounted for around one-third of the world’s energy consumption and electricity was a central element of that. If all the power consumed by factories and industrial plants came from renewable sources, energy company Epson said that would make a sizeable contribution to tackling climate change.
The RE100 initiative, for example, has seen more than 400 corporations commit to using 100% renewable electricity across their operations.
Paul Holdredge, director for industrials and transport at consultancy Business for Social Responsibility, said organisations with lighter electricity needs and stable finances would be best positioned to transition to renewables.
“Companies with high electricity demand, like furnaces for glass, smelting, or other large-scale heating applications, and companies with large footprints – such as expansive warehouses and assembly operations – may have more difficulty,” Holdredge said.
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