The International Renewable Energy Agency (IRENA) claims out of 261 GW of new renewable energy generation capacity added globally in 2020, 162 GW or 62% of the had lower costs than the cheapest new fossil fuel option, a point it stresses to argue that countries now have a strong business case to go past coal in their energy supply and purse a net zero economy ambition.
According to IRENA's latest report Renewable Power Generation Costs In 2020, new solar and wind projects are increasingly undercutting even the cheapest and least sustainable of existing coal-fired power plants. It counts 800 GW of existing coal-fired capacity as having higher operating costs compared to new utility scale solar PV and onshore wind, including $0.005 per kWh for integration costs.
Even retrofitting these coal assets with carbon capture and storage would increase costs, warns IRENA Director-General Francesco La Camera. He stressed 'there is no room for these coal assets to be part of the energy future'.
Cost reduction of renewables continues with annual reduction of 7% alone seen for solar PV technology in 2020 which means renewables like solar PV can 'undercut' existing operational costs as well, it claims. Competitive auctions are also bringing down costs for solar PV and onshore wind which continuously undercut even the cheapest new coal option without any financial support.
"In 2020, the 7% year-on-year decline in the LCOE of utility-scale solar PV, from $0.061/kWh to $ 0.057/kWh, was lower than the 13% decline experienced in 2019. In 2020, too, the global weighted-average total installed cost of utility-scale solar PV fell by 12%, to just $883/kW," points out the report, attributing the reason to a reduction in global weighted-average capacity factor of new projects in 2020.
In the US, IRENA believes annual savings from replacing coal with new solar and wind power capacity is likely to add up to $5.6 billion, while in India it would amount to $6.4 billion, and in Germany it would be $3.3 billion. In all, the world can save $32 billion annually by switching from coal to new solar and wind, and also bring down annual CO2 emissions by around 3 gigatonnes (GT).
Camera called for global solidarity for the world to ensure the whole world moves together towards energy transition with access to technology, financial strategies and investment support.
"Following the latest commitment by G7 to net-zero and stop global coal funding abroad, it is now for G20 and emerging economies to match these measures," explained Camera. "We cannot allow having a dual-track for energy transition where some countries rapidly turn green and others remain trapped in the fossil-based system of the past."
Complete IRENA report can be accessed on its website for free.
Recently, an analysis of Fraunhofer ISE claimed what it termed as the clear superiority of renewables in Germany over conventional power plants thanks to the LCOE of the former (see Rising CO2 Prices Validate Renewable Energy Projects).