Page 5 - AfrElec Week 22

AfrElec COMMENTARY AfrElec

Recent auctions and power purchase agree- because of the economic impact of coronavirus
ments (PPAs), the two most popular determin- (COVID-19).
ers of what price a power plant’s output is sold The report warned that although only renew-
for to the national grid, are continuing to show ables investment had shown any resilience to the
downward trends for projects to be commis- global collapse in energy demand, it was still well
sioned in 2020 and beyond. below what is needed to meet the world’s climate
IRENA forecasts that solar PV prices derived change goals.
from competitive procurement could average Indeed, the energy transition risks being
$0.039 per kWh for projects commissioned in undermined as investment dips, while the focus
2021, 42% less than in 2019. that governments and energy companies will
Crucially, this is 20% less than the cheapest direct towards green energy in future is far from
fossil fuel competitor, namely coal-fired plants. certain.
This level has already been seen at some While this is a pessimistic outlook, the falling
recent solar PV auctions in Abu Dhabi and costs outlined by IRENA’s report highlights how
Dubai (UAE), Chile, Ethiopia, Mexico, Peru and investment can and should be redirected into
Saudi Arabia, where bids of as low as $0.03 per renewables, as green energy offers lower costs
kWh were made. and better investment returns.
The report stressed that falling costs were In short, falling costs mean that renewables
the key way that investment in renewables was are out-competing large swathes of the fossil fuel
becoming more attractive. power industry and offer low-cost solutions to
The report found that renewables accounted the threats of climate change.
for 72% of all capacity additions in 2019. Green energy aligns short-term economic
needs with medium and long-term sustainable
Investment needs development goals.
In May, the International Energy Agency (IEA) While there are concerns that green invest-
issued a forecast that global energy investment ment is still far too low to meet climate change
would now fall by 20%, or $400bn, in 2020, targets, at least the economic case for renewables
rather than grow by the previous forecast of 2% is becoming sounder and clearer.™

Week 22 04•June•2020 www. NEWSBASE .com P5