Page 4 - AfrElec Week 22

AfrElec COMMENTARY AfrElec

Falling costs make renewables

competitive with coal

With solar PV costs falling 92% since 2010, renewables are cheaper
than half of new coal projects, writes Richard Lockhart

GLOBAL RENEWABLES now offer energy companies PV power has shown the sharpest decline at
considerable saving over coal, a new report from 82%, followed by concentrating solar power
WHAT: the International Renewables Energy Associa- (CSP) at 47%, onshore wind at 39% and offshore
More than half of the tion (IRENA) has found. wind at 29%.
world’s renewable The findings represent a major turning point Costs for solar and wind technologies also
capacity added in 2019 for the energy transition, as the case for both new continued to fall year on year.
achieved lower electricity and existing coal projects has become difficult Electricity costs from utility-scale solar PV
costs than new coal for investors to justify on both economic and fell 13% in 2019, reaching a global average of
environmental grounds. $0.068 per kWh.
WHY: “Renewable energy is increasingly the cheap- Onshore and offshore wind both declined
This is because of est source of new electricity, offering tremen- about 9%, reaching $0.053 per kWh and $0.115
improving technologies, dous potential to stimulate the global economy per kWh respectively. CSP fell by 1% in 2019 to
economies of scale, and get people back to work,” said Francesco La $0.182 per kWh.
increasingly competitive Camera, Director-General of IRENA. For geothermal projects, the LCOE in 2019
supply chains and The report’s headline finding was that more was $0.073 per kWh.
growing developer than half of the world’s renewable capacity added This compared with a figure of between $0.05
experience in 2019 achieved lower electricity costs than new per kWh and $0.177 per kWh for fossil fuels,
coal. both gas and coal. The lower level is for new,
WHAT NEXT: In a further death-knell for the coal sector, coal-fired plants in coal-producing regions in
Falling costs can aid the new solar and wind projects were also undercut- China, which offer the cheapest costs worldwide.
energy transition and ting the cheapest and least sustainable of existing
put renewables at the coal-fired plants. The future
heart of post-COVID-19 Looking ahead, IRENA was keen to highlight the
recovery Generating costs role that renewable energy can play in govern-
IRENA figures showed that 1,200GW of exist- ment’s post-coronavirus (COVID-19) recovery
ing coal-fired generating capacity could be more packages.
expensive to operate in 2021 than new utili- “A global recovery strategy must be a green
ty-scale solar photovoltaic (PV) costs to install. strategy,” La Camera added. “Renewables offer
These power stations have been dubbed a way to align short-term policy action with
stranded assets, meaning they no longer offer medium and long-term energy and climate
an economic return to their owner, in this case goals. Renewables must be the backbone of
because fossil fuel power plants are being under- national efforts to restart economies in the wake
cut by renewables. of the COVID-19 outbreak. With the right pol-
Indeed, replacing the costliest 500GW of coal icies in place, falling renewable power costs can
capacity with solar and wind would cut annual shift markets and contribute greatly towards a
system costs by as much as $23bn per year, and green recovery.”
reduce annual CO2 emissions by 1.8bn tonnes, Put simply, green energy’s continued cost
or 5% of last year’s global total. decline means that the world can afford to be
It would also yield a stimulus worth $940bn, ambitious amid the crisis.
or around 1% of global GDP. The report pointed out that renewables are
In terms of absolute generation costs, wind easily scalable and cost-effective, and can give
and solar PV have fallen by between 3% and a boost to economies that are facing economic
16% per year since 2010, driven by improving contraction and attract the interest of public and
technologies, economies of scale, increasingly private investors.
competitive supply chains and growing devel- Finally, green energy is the key to combating
oper experience. climate change and meeting the Paris Agree-
The report measured the global weighted-av- ment goals.
erage levelised cost of electricity (LCOE) The report is also confident that the trend of
Since 2010, the LCOE for utility-scale solar falling costs will continue.

P4 www. NEWSBASE .com Week 22 04•June•2020