A new report confirms the competitiveness of renewable energy sources and calls for a global shift away from coal. Renewable energy could save emerging countries around $156 billion.
In 2020, 162 gigawatts (GW) of new renewable energy capacity were installed worldwide. At the end of the year, there were 2,799 GW of renewable energy installations in the world. According to the International Renewable Energy Agency’s (IRENA) “Renewable Power Generation Costs in 2020” report, the cost of renewable energy continues to drop dramatically. Over the year, the cost of concentrated solar thermal power (CSP) decreased by 16%, onshore wind by 13%, offshore wind by 9%, and solar PV by 7%. Finally, by 2020, 62% of new renewable capacity was cheaper than the cheapest fossil fuel option: coal.
Given the 2050 carbon neutrality commitments, these new technologies have a clear advantage, according to the IRENA. “New renewable energy projects added in 2020 will allow emerging countries to save up to $156 billion over their lifetime,” the international agency estimates. At equivalent production levels, renewable energy projects added in 2020 will reduce the cost of the electricity sector in emerging countries by at least $6 billion per year compared to fossil fuels. This also while reducing greenhouse gas emissions. “Two-thirds of these savings will come from onshore wind, and to a lesser extent from hydropower and solar PV,” according to the IRENA. Since 2010, the 534 GW of renewable capacity added in emerging countries at a lower cost than the cheaper coal option has reduced electricity costs by about $32 billion per year, the agency calculates.
Most coal costs more
The study shows that 800 GW of existing coal-fired capacity has higher operating costs than the newer large-scale solar PV and onshore wind power. Replacing these coal-fired plants would reduce annual system costs by $32.3 billion. This would avoid about 3 gigatonnes of CO2 emissions per year. This represents 9% of global energy-related CO2 emissions in 2020 or the equivalent of 20% of the reduction needed by 2030 to limit the temperature increase to 1.5°C according to the trajectory described in IRENA’s World Energy Transitions Outlook: 1.5°C Pathway.
In the US, operating 61% of total coal-fired capacity would cost more than new renewable capacity. “Removing these plants and replacing them with renewables would reduce expenditures by $5.6 billion per year and save 332 million tons of CO2, reducing US carbon emissions by a third,” IRENA calculates. In Germany, no existing coal-fired power plant has lower operating costs than a new onshore PV or wind power plant.
Significant cost reduction since 2010
Between 2010 and 2020, electricity costs have fallen by 85% for utility-scale PV. The cost of electricity has fallen 68% for concentrated solar-thermal (CSP), 56% for onshore wind, and 48% for offshore wind. “With record auction prices of 1.1 to 0.03/kWh today, the price of solar PV and onshore wind is consistently lower than the new cheaper coal-fired options even without any financial support,” says IRENA.
Following the recent G7 commitment to reduce zero emissions and end global coal financing abroad, it is now up to the G20 and emerging economies to implement these measures,” warns Francesco La Camera, Director General of IRENA. We cannot afford a two-tier energy transition, with some countries rapidly going green while others remain stuck in the old fossil fuel system.