Page 5 - AsiaElec Week 22
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AsiaElec COMMENTARY AsiaElec
Recent auctions and power purchase agree- ments (PPAs), the two most popular determin- ers of what price a power plant’s output is sold for to the national grid, are continuing to show downward trends for projects to be commis- sioned in 2020 and beyond.
IRENA forecasts that solar PV prices derived from competitive procurement could average $0.039 per kWh for projects commissioned in 2021, 42% less than in 2019.
Crucially, this is 20% less than the cheapest fossil fuel competitor, namely coal-fired plants. This level has already been seen at some
recent solar PV auctions in Abu Dhabi and Dubai (UAE), Chile, Ethiopia, Mexico, Peru and Saudi Arabia, where bids of as low as $0.03 per kWh were made.
The report stressed that falling costs were the key way that investment in renewables was becoming more attractive.
The report found that renewables accounted for 72% of all capacity additions in 2019.
Investment needs
In May, the International Energy Agency (IEA) issued a forecast that global energy investment would now fall by 20%, or $400bn, in 2020, rather than grow by the previous forecast of 2%
because of the economic impact of coronavirus (COVID-19).
The report warned that although only renew- ables investment had shown any resilience to the global collapse in energy demand, it was still well below what is needed to meet the world’s climate change goals.
Indeed, the energy transition risks being undermined as investment dips, while the focus that governments and energy companies will direct towards green energy in future is far from certain.
While this is a pessimistic outlook, the falling costs outlined by IRENA’s report highlights how investment can and should be redirected into renewables, as green energy offers lower costs and better investment returns.
In short, falling costs mean that renewables are out-competing large swathes of the fossil fuel power industry and offer low-cost solutions to the threats of climate change.
Green energy aligns short-term economic needs with medium and long-term sustainable development goals.
While there are concerns that green invest- ment is still far too low to meet climate change targets, at least the economic case for renewables is becoming sounder and clearer.
Week 22 03•June•2020 w w w . N E W S B A S E . c o m P5
