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Competitive power generation costs make investment in renewables highly attractive as countries target economic recovery from COVID-19, new IRENA report finds.

Abu Dhabi, United Arab Emirates, 2 June 2020 — Renewable power is increasingly cheaper than any new electricity capacity based on fossil fuels, a new report by the International Renewable Energy Agency (IRENA) published today finds. Renewable Power Generation Costs in 2019 shows that more than half of the renewable capacity added in 2019 achieved lower power costs than the cheapest new coal plants.

The report highlights that new renewable power generation projects now increasingly undercut existing coal-fired plants. On average, new solar photovoltaic (PV) and onshore wind power cost less than keeping many existing coal plants in operation, and auction results show this trend accelerating – reinforcing the case to phase-out coal entirely. Next year, up to 1 200 gigawatts (GW) of existing coal capacity could cost more to operate than the cost of new utility-scale solar PV, the report shows.

Replacing the costliest 500 GW of coal with solar PV and onshore wind next year would cut power system costs by up to USD 23 billion every year and reduce annual emissions by around 1.8 gigatons (Gt) of carbon dioxide (CO2), equivalent to 5% of total global CO2 emissions in 2019. It would also yield an investment stimulus of USD 940 billion, which is equal to around 1% of global GDP.

“We have reached an important turning point in the energy transition. The case for new and much of the existing coal power generation, is both environmentally and economically unjustifiable,” said Francesco La Camera, Director-General of IRENA. “Renewable energy is increasingly the cheapest source of new electricity, offering tremendous potential to stimulate the global economy and get people back to work. Renewable investments are stable, cost-effective and attractive offering consistent and predictable returns while delivering benefits to the wider economy.

“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 policies in place, falling renewable power costs, can shift markets and contribute greatly towards a green recovery.”

Renewable electricity costs have fallen sharply over the past decade, driven by improving technologies, economies of scale, increasingly competitive supply chains and growing developer experience. Since 2010, utility-scale solar PV power has shown the sharpest cost 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 power technologies also continued to fall year-on-year. Electricity costs from utility-scale solar PV fell 13% in 2019, reaching a global average of 6.8 cents (USD 0.068) per kilowatt-hour (kWh). Onshore and offshore wind both declined about 9%, reaching USD 0.053/kWh and USD 0.115/kWh, respectively.

Recent auctions and power purchase agreements (PPAs) show the downward trend continuing for new projects are commissioned in 2020 and beyond. Solar PV prices based on competitive procurement could average USD 0.039/kWh for projects commissioned in 2021, down 42% compared to 2019 and more than one-fifth less than the cheapest fossil-fuel competitor namely coal-fired plants. Record-low auction prices for solar PV in Abu Dhabi and Dubai (UAE), Chile, Ethiopia, Mexico, Peru and Saudi Arabia confirm that values as low as USD 0.03/kWh are already possible.

For the first time, IRENA’s annual report also looks at investment value in relation to falling generation costs. The same amount of money invested in renewable power today produces more new capacity than it would have a decade ago. In 2019, twice as much renewable power generation capacity was commissioned than in 2010 but required only 18% more investment.

• Sector adds 176 GW of generating capacity with solar and wind accounting for 90 per cent of additions.
• Abu Dhabi, United Arab Emirates, 6 April 2020 — The renewable energy sector added 176 gigawatts (GW) of generating capacity globally in 2019, marginally lower than the (revised) 179 GW added in 2018. However, new renewable power accounted for 72 per cent of all power expansion last year, according to new data released by the International Renewable Energy Agency (IRENA).
• IRENA’s annual Renewable Capacity Statistics 2020 shows that renewables expanded by 7.6 per cent last year with Asia dominating growth and accounting for 54 per cent of total additions. While expansion of renewables slowed last year, total renewable power growth outpaced fossil fuel growth by a factor of 2.6, continuing the dominance of renewables in power expansion first established in 2012. Solar and wind contributed 90 per cent of total renewable capacity added in 2019.
• “Renewable energy is a cost-effective source of new power that insulates power markets and consumers from volatility, supports economic stability and stimulates sustainable growth,” said IRENA Director-General Francesco La Camera. “With renewable additions providing the majority of new capacity last year, it is clear that many countries and regions recognise the degree to which the energy transition can deliver positive outcomes.”
• “While the trajectory is positive, more is required to put global energy on a path with sustainable development and climate mitigation – both of which offer significant economic benefits,” continued Mr. La Camera. “At this challenging time, we are reminded of the importance of building resilience into our economies. In what must be the decade of action, enabling policies are needed to increase investments and accelerate renewables adoption.”
• Renewables accounted for at least 70 per cent of total capacity expansion in almost all regions in 2019, other than in Africa and the Middle East, where they represented 52 per cent and 26 per cent of net additions respectively. The additions took the renewable share of all global power capacity to 34.7 per cent, up from 33.3 per cent at the end of 2018. Non-renewable capacity expansion globally followed long-term trends in 2019, with net growth in Asia, the Middle East and Africa, and net decommissioning in Europe and North America.
• Solar added 98 GW in 2019, 60 per cent of which was in Asia. Wind energy expanded by close to 60 GW led by growth in China (26 GW) and the United States (9 GW). The two technologies now generate 623 GW and 586 GW respectively – close to half of global renewable capacity. Hydropower, bioenergy, geothermal and marine energy displayed modest year on year expansion of 12 GW, 6 GW, 700 MW and 500 MW respectively.
• Asia was responsible for over half of new installations despite expanding at a slightly slower pace than in 2018. Growth in Europe and North America increased year on year. Africa added 2 GW of renewable capacity in 2019, half of the 4 GW it installed in 2018.
• Highlights by technology:

• Hydropower: Growth was unusually low in 2019, possibly because some large projects missed their expected completion dates. China and Brazil accounted for most of the expansion, each adding more than 4 GW.
• Wind energy: Wind performed particularly well in 2019, expanding by nearly 60 GW. China and the United States continued to dominate with increases of 26 GW and 9 GW respectively.
• Solar energy: Asia continued to dominate global solar capacity expansion with a 56 GW increase, but this was lower than in 2018. Other major increases were in the United States, Australia, Spain, Ukraine and Germany.
• Bioenergy: Expansion of bioenergy capacity remained modest in 2019. China accounted for half of all new capacity (+3.3 GW). Germany, Italy, Japan and Turkey also saw expansion.
• Geothermal energy: Geothermal power capacity grew by 682 MW in 2019, slightly more than in 2018. Again, Turkey led with an expansion of 232 MW, followed by Indonesia (+185 MW) and Kenya (+160 MW).
• Off-grid electricity: Off-grid capacity grew by 160 MW (+2%) to reach 8.6 GW in 2019. In 2019, off-grid solar PV increased by 112 MW and hydropower grew by 31 MW, compared to growth of only 17 MW for bioenergy.