The amount of renewable energy that came in cheaper than the most competitive fossil fuel option doubled last year, according to new analysis from the International Renewable Energy Agency (IRENA).
In total, 62% (162GW) of renewable power added last year was developed at a price lower than the cheapest fossil fuels, driven by the falling cost of renewable technologies. The Renewable Power Generation Costs in 2020 report said solar PV costs dropped a further 7% last year.
“Today, renewables are the cheapest source of power,” said IRENA’s director-general Francesco La Camera. “Renewables present countries tied to coal with an economically attractive phase-out agenda that ensures they meet growing energy demand, while saving costs, adding jobs, boosting growth and meeting climate ambition.”
Over the decade 2010-2020, the cost of electricity from solar has plummeted by 85% for solar PV. And with record low prices for US$0.011-0.03c/kWh today, solar PV undercuts the cheapest new coal option without any financial assistance, said the report.
The report also showed that renewables have a lower operating cost than coal plants. Today, over 800GW of the world’s operating coal power capacity is more expensive to run than solar PV.
Broken down further, in the US 61% (149GW) of total coal capacity costs more than renewable power. In India, 141GW of coal is more expensive. And in Germany, no existing coal plant has a lower operating cost than that of new solar PV.
Similarly, a recent report from the Fraunhofer Institute for Solar Energy Systems confirmed that solar plants in Germany have substantially lower levelised cost of energy (LCOE) than conventional power plants.
How solar is beating coal in Germany
The Fraunhofer Institute for Solar Energy Systems ISE has presented the fifth edition of its study on the levelised cost of electricity (LCOE) of renewable power plants in Germany. Key takeaways include:
- The LCOE from PV plants has continued to fall since the last report in 2018
- The LCOE of PV ranged from €0.031-0.1101c/kWh (US$0.037-0.132c/kWh)
- Today the LCOE of hybrid PV-battery systems ranges from €0.0524-0.198c/kWh
- In 2021, the LCOE of renewables is at the same level as conventional power plants
- Forecasts up to 2040 showed that the LCOE for ground-mounted PV systems will be €0.019-0.035c/kWh
- By 2040, system costs are expected to fall below €350/kW for ground-mounted PV
In the last decade, the 534GW of renewable capacity added in emerging economies (at lower costs than coal) is reducing electricity costs by US$32 billion every year.