81% Of Renewable Additions In 2023 Cheaper Than Fossil Fuels: IRENA Report

The International Renewable Energy Agency (IRENA) recently unveiled the Renewable Power Generation Costs in 2023 report at the Global Renewables Summit, highlighting the competitive edge of renewable energy. The report, released during the UN General Assembly in New York, emphasizes that despite fossil fuel prices stabilizing closer to their historical averages, renewable energy sources remain a cost-effective choice.

A significant share of the energy capacity added in 2023, amounting to 81% or 382 gigawatts (GW) of the total 473 GW, came from utility-scale renewable projects. These ventures were more economical than their fossil fuel counterparts. The report underlines that the technological advancements and cost reductions in solar and wind energy over recent decades have solidified the financial, environmental, and socio-economic case for transitioning towards renewable power.

Francesco La Camera, IRENA's Director-General, stated, "Renewable power remains cost-competitive vis-à-vis fossil fuels. The virtuous cycle of long-term support policies has accelerated renewables. In return, growth has led to technology improvements and cost reductions. Prices for renewables are no excuse anymore, on the contrary. The record growth of renewables in 2023 exemplifies this. Low-cost renewables represent a key incentive to significantly increase ambition and triple renewable power capacity by 2030, as modelled by IRENA and set by the UAE Consensus at COP28."

The report details the remarkable cost declines across renewable technologies, with solar photovoltaics (PV) witnessing a 56% cost reduction compared to fossil fuel and nuclear power options in 2023, translating to an average cost of about four US cents per kilowatt-hour. These cost savings have broader implications, with renewables deployed since 2000 saving up to US$409 billion in fuel costs in the power sector globally.

IRENA projects that achieving a tripling of renewable energy capacity by 2030 would require adding approximately 1,044 GW of new capacity annually, aiming for a total of 11.2 terawatts (TW). The bulk of this expansion, reaching 8.5 TW, would predominantly come from solar PV and onshore wind. Such growth is underscored by the need for enabling technologies like storage, which has seen an 89% cost reduction between 2010 and 2023, aiding the integration of solar and wind energy into power grids by resolving infrastructure challenges.

"In the coming years, remarkable growth across all renewable energy sources is expected, giving countries great economic opportunities. Our analysis indicates that solar PV and onshore wind will have the biggest impacts on the tripling of renewables. Thanks to low-cost renewables in the global market, policymakers have an immediate solution at hand to reduce fossil fuels dependency, limit the economic and social damage of carbon-intensive energy use, drive economic development, and harness energy security benefits," La Camera added.

Furthermore, the global weighted average cost of electricity from newly commissioned renewable projects has seen a decrease across most technologies in 2023, with solar PV costs dropping by 12%, onshore wind by 3%, offshore wind by 7%, concentrating solar power (CSP) by 4%, and hydropower by 7%. In regions with growing electricity demand, such as non-OECD economies, renewable projects that are more cost-effective than fossil fuels could substantially lower overall electricity system costs over their operational lifespan.

Asia led in cumulative savings from 2000 to 2023, achieving an estimated $212 billion, followed by Europe at $88 billion and South America at $53 billion. With renewable energy becoming the least-cost option for new power generation, the focus now shifts towards aligning policies, market structures, and financial mechanisms with the ambitious goal of tripling renewable capacity. This alignment is crucial as nations prepare their next round of Nationally Determined Contributions (NDCs) to the Paris Agreement in 2025, setting the stage for a future powered by sustainable and cost-effective renewable energy.