LONDON—Electricity generated by onshore wind and solar photovoltaic (PV) technologies will in the next year be consistently cheaper than from any fossil fuel source, a report showed on May 29, boosting the case for energy sources that don’t emit carbon.
The trend for cut-price renewable energy is already set but the report by the International Renewable Energy Agency (IRENA) gives fresh evidence of the speed of the decline, driven by increased production runs and technology improvements.
“Onshore wind and solar PV are set by 2020 to consistently offer a less expensive source of new electricity than the least-cost fossil-fuel alternative without financial assistance,” said IRENA, a government-backed body that aims to support countries in their transition to sustainable energy sources.
The global weighted average cost of electricity generated by concentrated solar power fell by 26% last year from a year earlier, data compiled by the agency showed. Bioenegy fell by 14%, solar PV and onshore wind by 13%, hydropower by 12% and geothermal and offshore wind by 1%.
Costs of $0.03 to $0.04 per kilowatt hour (kWh) for onshore wind and solar PV are already possible in some parts of the world.
Record-low auction prices for solar PV over the past couple of years in Chile, Mexico, Peru, Saudi Arabia and the United Arab Emirates for example have seen a cost as low as $0.03/kWh, IRENA found.
Over three-quarters of onshore wind and four-fifths of large-scale solar PV capacity to be commissioned next year shows lower prices than the cheapest new coal-fired, oil or natural gas sources, the report said.
At the start of last year, IRENA forecast the global average cost of electricity could fall to less than $0.049/kWh for onshore wind and $0.055/kWh for solar PV by 2020.
“A year later, the potential value for onshore wind in 2020 has dropped a further 8% to $0.045/kWh, while that of solar PV has dropped 13% to $0.048/kWh,” said the report, based on data from IRENA’s own members, business journals, industry groups, consultancies, governments, auctions and tenders.
As well as 160 countries, IRENA’s membership includes utilities, project developers, research institutes and companies, all of which provided data for its Renewable Cost Database.
Recommended Reading
Petrie Partners: A Small Wonder
2024-02-01 - Petrie Partners may not be the biggest or flashiest investment bank on the block, but after over two decades, its executives have been around the block more than most.
Kissler: OPEC+ Likely to Buoy Crude Prices—At Least Somewhat
2024-03-18 - By keeping its voluntary production cuts, OPEC+ is sending a clear signal that oil prices need to be sustainable for both producers and consumers.
Sunoco’s $7B Acquisition of NuStar Evades Further FTC Scrutiny
2024-04-09 - The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act for Sunoco’s pending acquisition of NuStar Energy has expired, bringing the deal one step closer to completion.
The OGInterview: Petrie Partners a Big Deal Among Investment Banks
2024-02-01 - In this OGInterview, Hart Energy's Chris Mathews sat down with Petrie Partners—perhaps not the biggest or flashiest investment bank around, but after over two decades, the firm has been around the block more than most.
Shell’s CEO Sawan Says Confidence in US LNG is Slipping
2024-02-05 - Issues related to Venture Global LNG’s contract commitments and U.S. President Joe Biden’s recent decision to pause approvals of new U.S. liquefaction plants have raised questions about the reliability of the American LNG sector, according to Shell CEO Wael Sawan.