The costs for renewable energy technologies reached new lows again last year. Solar and wind power have emerged as the most affordable power source for many locations and markets, with cost reductions set to continue into the next decade. Cost declines across the board in 2018 have reconfirmed the status of renewable power as a highly cost-effective energy source. New solar photovoltaic (PV) and onshore wind power are on the verge of costing less than the marginal operating cost of existing coal-fired plants. Steadily improving competitiveness has made renewables the backbone of the world’s energy transformation.
The International Renewable Energy Agency (IRENA) has tracked and analysed the cost evolution of renewable power since 2012. Combining the latest data with global coverage and a transparent methodology has helped to shed light on the accelerating momentum of renewables, not only as a key climate solution but also as a strong business proposition. Within IRENA’s database, for instance, over three-quarters of the onshore wind and four-fifths of the solar PV project capacity due to be commissioned in 2020 should produce cheaper electricity than any coal, oil or natural gas option. Crucially, they are set to do so without financial assistance.
The competitiveness of renewable power generation options was not always widely recognised. However, the past decade has seen governments, industry, financing institutions, investors and project developers work together to drive down costs and improve performance. Solar and wind power – once seen as an expensive way to address economic, environmental and social-development goals – are now a cost-competitive way to meet energy demand. To fully harness the economic opportunity of renewables, IRENA will work closely with countries to develop concerted action on the ground. Electrification with renewables offers a low-cost decarbonisation solution to meet the climate goals set out in the Paris Agreement. Any development aiming to be sustainable needs to tap into renewable power.