All renewable technologies set to be as cheap as fossil fuels by 2020

A new report has concluded that all renewable technologies will be cost competitive worldwide within the next two to three years, and some are already beating fossil fuels on price.

Over the past 12 months, the global average costs for onshore wind and solar PV have come in at USD 6 cents and 10 cents per kWh. Onshore wind in particular is now commissioning at prices as low as 4 cents/kWh. In contrast, fossil fuel technologies have a wide cost range, from 5-17 cents/kWh.

The report, released by the International Renewable Energy Agency (IRENA), entitled Renewable Power Generation Costs in 2017, analysed data from 15,000 large-scale renewable projects; competitive auction results; and procurement processes for around 7,000 projects around the world.

It found that the cost of generating power from onshore wind has fallen by around a quarter since 2010, with solar photovoltaic (PV) electricity costs falling by 73 per cent. In addition, these costs will continue to fall over the next few years; solar in particular is expected to halve its costs to 3 cents. Some countries, such as Abu Dhabi, Mexico, and Saudi Arabia, have already set this benchmark. 

New bioenergy and geothermal projects which were completed in 2017 had a global average cost of around 7 cents/kWh.

 “This new dynamic signals a significant shift in the energy paradigm,” said Adnan Z. Amin, IRENA Director-General. “These cost declines across technologies are unprecedented and representative of the degree to which renewable energy is disrupting the global energy system." 

The report cited three main factors behind the large fall in costs: technological innovations; competitive auctions and an increase in experienced project developers.

“Turning to renewables for new power generation is not simply an environmentally conscious decision, it is now – overwhelmingly – a smart economic one,” continued Mr. 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”.