Renewables Competitiveness Accelerates, Despite Cost Inflation

The fossil fuel price crisis has accelerated the competitiveness of renewable power. Around 86 per cent (187 gigawatts) of all the newly commissioned renewable capacity in 2022 had lower costs than fossil fuel-fired electricity.

Renewable Power Generation Costs in 2022, published by the International renewableenergy Agency (IRENA) today shows that the renewable power added in 2022 reduced the fuel bill of the electricity sector worldwide. New capacity added since 2000 reduced the electricity sector fuel bill in 2022 by at least USD 520 billion. In non-OECD countries, just the saving over the lifetime of new capacity additions in 2022 will reduce costs by up to USD 580 billion.

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In addition to these direct cost savings, there would be substantial economic benefits from reducing CO2 emissions and local air pollutants. Without the deployment of renewables over the last two decades, the economic disruption from the fossil fuel price shock in 2022 would have been much worse and possibly beyond many governments ability to soften with public funding.

IRENA’s new report confirms the critical role that cost-competitive renewables play in addressing today’s energy and climate crises by accelerating the transition in line with the 1.5°C warming limit. Renewables represent vital planks in countries’ efforts to swiftly reduce, and eventually phase out, fossil fuels and limit the macroeconomic damage they cause in pursuit of net-zero emissions.

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IRENA’s Director-General Francesco La Camera said: “IRENA sees 2022 as a veritable turning point in the deployment for renewables as its cost-competitiveness has never been greater despite the lingering commodity and equipment cost inflation around the world. The most affected regions by the historic price shock were remarkably resilient, in large part thanks to the massive increase of solar and wind in the last decade.”

“Today, the business case for renewables is compelling, but the world must add 1 000 GW of renewable power annually on average every year until 2030 to keep 1.5°C within reach, more than three times 2022 levels. There is no time for a new energy system to evolve gradually as was the case for fossil fuels. In preparation of the COP28 in Dubai later this year, today’s report shows once again that with renewables, countries have the best climate solution at hand to raise ambition and take actions in a cost-competitive way.”

Commodity and equipment cost inflation in 2022 resulted in countries experiencing markedly different trends in costs in 2022, IRENA’s new report finds. However, at a global level, the weighted-average cost of electricity fell for utility-scale solar PV by 3 per cent, for onshore wind by 5 per cent, for concentrating solarpower by 2 per cent, for bioenergy by 13 per cent and for geothermal by 22 per cent.

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