Page 4 - AsiaElec Week 22

AsiaElec COMMENTARY AsiaElec
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
WHAT:
More than half of the world’s renewable capacity added in 2019 achieved lower electricity costs than new coal
WHY:
This is because of improving technologies, economies of scale, increasingly competitive supply chains and growing developer experience
WHAT NEXT:
Falling costs can aid the energy transition and put renewables at the heart of post-COVID-19 recovery
RENEWABLES now offer energy companies considerable saving over coal, a new report from the International Renewables Energy Associa- tion (IRENA) has found.
The findings represent a major turning point for the energy transition, as the case for both new and existing coal projects has become difficult for investors to justify on both economic and environmental grounds.
“Renewable energy is increasingly the cheap- est source of new electricity, offering tremen- dous potential to stimulate the global economy and get people back to work,” said Francesco La Camera, Director-General of IRENA.
The report’s headline finding was that more than half of the world’s renewable capacity added in 2019 achieved lower electricity costs than new coal.
In a further death-knell for the coal sector, new solar and wind projects were also undercut- ting the cheapest and least sustainable of existing coal-fired plants.
Generating costs
IRENA figures showed that 1,200GW of exist- ing coal-fired generating capacity could be more expensive to operate in 2021 than new utili- ty-scale solar photovoltaic (PV) costs to install.
These power stations have been dubbed stranded assets, meaning they no longer offer an economic return to their owner, in this case because fossil fuel power plants are being under- cut by renewables.
Indeed, replacing the costliest 500GW of coal capacity with solar and wind would cut annual system costs by as much as $23bn per year, and reduce annual CO2 emissions by 1.8bn tonnes, or 5% of last year’s global total.
It would also yield a stimulus worth $940bn, or around 1% of global GDP.
In terms of absolute generation costs, wind and solar PV have fallen by between 3% and 16% per year since 2010, driven by improving technologies, economies of scale, increasingly competitive supply chains and growing devel- oper experience.
The report measured the global weighted-av- erage levelised cost of electricity (LCOE)
Since 2010, the LCOE for utility-scale solar
PV power has shown the sharpest decline at 82%, followed by concentrating solar power (CSP) at 47%, onshore wind at 39% and offshore wind at 29%.
Costs for solar and wind technologies also continued to fall year on year.
Electricity costs from utility-scale solar PV fell 13% in 2019, reaching a global average of $0.068 per kWh.
Onshore and offshore wind both declined about 9%, reaching $0.053 per kWh and $0.115 per kWh respectively. CSP fell by 1% in 2019 to $0.182 per kWh.
For geothermal projects, the LCOE in 2019 was $0.073 per kWh.
This compared with a figure of between $0.05 per kWh and $0.177 per kWh for fossil fuels, both gas and coal. The lower level is for new, coal-fired plants in coal-producing regions in China, which offer the cheapest costs worldwide.
The future
Looking ahead, IRENA was keen to highlight the role that renewable energy can play in govern- ment’s post-coronavirus (COVID-19) recovery packages.
“A global recovery strategy must be a green strategy,” La Camera added. “Renewables offer a way to align short-term policy action with medium and long-term energy and climate goals. Renewables must be the backbone of national efforts to restart economies in the wake of the COVID-19 outbreak. With the right pol- icies in place, falling renewable power costs can shift markets and contribute greatly towards a green recovery.”
Put simply, green energy’s continued cost decline means that the world can afford to be ambitious amid the crisis.
The report pointed out that renewables are easily scalable and cost-effective, and can give a boost to economies that are facing economic contraction and attract the interest of public and private investors.
Finally, green energy is the key to combating climate change and meeting the Paris Agree- ment goals.
The report is also confident that the trend of falling costs will continue.
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w w w . N E W S B A S E . c o m Week 22 03•June•2020