The global cost of generating power from onshore wind has fallen by nearly a quarter since 2010, while solar photovoltaic (PV) electricity costs have fallen by nearly three-quarters, according to a new cost analysis from the International Renewable Energy Agency (IRENA). Importantly, IRENA projects that all renewable energy technologies will be cost-competitive with fossil fuels by 2020.
The report also highlights that solar PV costs are expected to halve by 2020. Furthermore, onshore wind and solar PV projects could be delivering electricity for an equivalent of $0.03/kWh or less within the next two years, IRENA predicts.
According to the report, global weighted average costs over the last 12 months for onshore wind and solar PV now stand at $0.06/kWh and $0.10/kWh, respectively, but recent auction results suggest future projects will significantly undercut these averages. The report also highlights that onshore wind is now routinely commissioned for $0.04/kWh, while the current cost spectrum for fossil-fuel power generation ranges from $0.05/kWh to $0.17/kWh.
“This new dynamic signals a significant shift in the energy paradigm,” says Adnan Z. Amin, IRENA’s director-general. “These cost declines across technologies are unprecendented and representative of the degree to which renewable energy is disrupting the global energy system.”
Released on the first day of IRENA’s Eighth Assembly in Abu Dhabi, “Renewable Power Generation Costs in 2017” highlights that other forms of renewable power generation – such as bioenergy, geothermal and hydropower projects – have competed head-to-head on costs with power from fossil fuels in the last 12 months. Furthermore, the report notes that by 2019, the best onshore wind and solar PV projects will be delivering electricity for $0.03/kWh – significantly below the current cost of power from fossil fuels.
Competitive procurement practices, along with the emergence of a large base of experienced project developers competing for global market opportunities, are cited as new drivers of recent cost reductions, in addition to continued technology advancements, says IRENA.
The report also highlights that auction results are signaling that offshore wind and concentrating solar power projects commissioned in the period between 2020 and 2022 will cost in the range of $0.06/kWh to $0.10/kWh, supporting accelerated deployment globally.
Specifically, the report highlights the following statistics:
- The global weighted average levelized cost of electricity of utility-scale solar PV has fallen by 73% between 2010 and 2017 to $0.10/kWh;
- The average cost of electricity from onshore wind fell by 23% between 2010 and 2017. Projects are now routinely commissioned at $0.04/kWh, and the global weighted average is around $0.06/kWh;
- By 2019, the best onshore wind and solar PV projects will be delivering electricity for an equivalent of $0.03/kWh or less. Comparatively, new bioenergy and geothermal projects commissioned in 2017 had global weighted average costs of around $0.07/kWh;
- Record-low prices for solar PV in Abu Dhabi, Chile, Dubai, Mexico, Peru and Saudi Arabia have made $0.03/kWh (and below) the new benchmark;
- By 2020, project and auction data suggest that all currently commercialized renewable power generation technologies will be competing – and even undercutting – fossil fuels by generating in the range $0.03/kWh to $0.10/kWh.
“Turning to renewables for new power generation is not simply an environmentally conscious decision – it is now, overwhelmingly, a smart economic one,” adds Amin. “Governments around the world are recognizing this potential and forging ahead with low-carbon economic agendas underpinned by renewables-based energy systems. We expect the transition to gather further momentum, supporting jobs, growth, improved health, national resilience and climate mitigation around the world in 2018 and beyond.”