The costs of energy produced from renewable sources continue to fall, and renewable energy production is increasingly becoming the source of choice for investment in new energy generation, thanks to its lower cost. This makes it more attractive than ever for actions to support economic recovery following the economic crisis generated by the Covid-19 pandemic. This is what emerges from the new report "Renewable Power Generation Costs in 2019" by the International Renewable Energy Agency (Irena).

New solar more competitive than old coal

The report shows that more than half of the renewable capacity installed in 2019 achieved energy costs lower than those of new coal-fired power plants, even the cheapest ones. The investment required to build new renewable plants is increasingly falling below the cost of operating existing coal plants. On average, building new solar photovoltaic or onshore wind plants costs less than keeping many existing coal plants running. These findings are also confirmed by the results of electricity auctions, which show that this trend is accelerating, reinforcing the need to retire coal-fired power plants once and for all.

"Renewable energy is becoming the cheapest source of new electricity, offering enormous potential to stimulate the global economy and get people back to work. Investments in renewable energy are stable, affordable and attractive, offering steady and predictable returns while also delivering benefits to the wider economy," said Francesco La Camera, Director-General of Irena.

Solar and wind to bring down energy bill costs

According to the data, next year the management of 1,200 gigawatts of installed capacity from coal-fired power plants could cost more than the cost of new utility-scale solar photovoltaic plants. If in 2021 we were to replace 500 GW of coal with solar or onshore wind, we could reduce energy system costs by up to 23 billion dollars a year, without factoring in the fall in annual carbon dioxide (CO2) emissions of around 1.8 gigatonnes (Gt), equivalent to 5 per cent of total global CO2 emissions in 2019. Furthermore, it would generate an investment stimulus of 940 billion dollars, equivalent to around 1 per cent of global GDP.

"A global recovery strategy must be a green strategy. Renewables offer a way to align short-term policy action with medium- and long-term energy and climate objectives," La Camera added. "Renewables must be the backbone of national efforts to restart economies in the wake of the Covid-19 pandemic."

In 10 years, renewable energy costs have fallen by 82 per cent

The costs of renewable electricity have fallen considerably over the last decade, thanks to improved technologies, economies of scale, increasingly competitive supply chains and the growing experience of developers. Since 2010, with a cost reduction of 82 per cent, utility-scale solar photovoltaic has shown the steepest decline, followed by concentrating solar power (CSP) at 47 per cent, onshore wind (39%) and offshore wind (29%).

The costs of technologies for solar and wind energy have also continued to fall year on year. The costs of utility-scale solar fell by 13 per cent in 2019, reaching a global average of 6.8 cents (USD 0.068) per kilowatt-hour (kWh). Onshore and offshore wind both fell by around 9 per cent, reaching USD 0.053 and USD 0.115/kWh respectively.