Renewable Power Generation Costs Reduction - 2020 Overview in the Recent Study of IRENA Released in 2021 with LCOE of Renewable Energy Technologies
/30th June 2021, IRENA, RENEWABLE MARKET WATCHTM/ Installing Between 2000 and 2020, renewable power generation capacity worldwide increased 3.7‑fold, from 754 gigawatts (GW) to 2 799 GW, as their costs have fallen sharply, driven by steadily improving technologies, economies of scale, competitive supply chains and improving the developer experience. Costs for electricity from utility-scale solar photovoltaics (PV) fell 85% between 2010 and 2020. Renewables are becoming more and more competitive in the energy landscape. The data from the IRENA Renewable Cost Database shows cost declines continued in 2020, with the cost of electricity from utility-scale solar photovoltaics (PV) falling 7% year-on-year, offshore wind fell by 9%, onshore wind by 13% and that of concentrating solar power (CSP) by 16%.
The decade 2010 to 2020 saw renewable power generation becoming the default economic choice for new capacity. In that period, the competitiveness of solar (concentrating solar power, utility‑scale solar photovoltaic) and offshore wind all joined onshore wind in the same range of costs as for new capacity fired by fossil fuels, calculated without financial support. Indeed, the trend is not only one of the renewables competing with fossil fuels, but significantly undercutting them, when new electricity generation capacity is required.
IRENA has, for over a decade, highlighted the essential role renewable power generation will play in the energy transition, as the opportunities for cost reduction were time and again, demonstrated, and then, in many cases, exceeded as smart policy and the razor-sharp focus of industry combined to unlock better performance and lower costs. The insights from IRENA’s data bear witness to the fruits of IRENA’s pluriannual programme of work and its focus on providing our Member States with the facts they need to support the energy transition at home. With falling renewable power generation costs, updates to Nationally Determined Contributions (NDC) need to consider the opportunities that have emerged in recent years. Countries can be more ambitious, and IRENA is ready to support them in that process.
Chart 1: Renewable Energy Costs Declined Rapidly Over the Last 10 years (2010-2019); Source: IRENA
IRENA’s cost analysis programme has been collecting and reporting the cost and performance data of renewable power generation technologies since 2012. The two core sources of data for the cost and performance metrics contained in this report are the IRENA Renewable Cost Database and the IRENA Auctions and Power Purchase Agreement (PPA) databases. This year, for the first time, the report also includes a snapshot of IRENA’s cost data for behind‑the‑meter battery storage and solar thermal technologies for industrial heat.
1) In 2020, the global weighted-average levelised cost of electricity (LCOE) from new capacity additions of onshore wind declined by 13%, compared to 2019. Over the same period, the LCOE of offshore wind fell by 9% and that of utility-scale solar photovoltaics (PV) by 7%.
2) Renewable power generation costs have fallen sharply over the past decade, driven by steadily improving technologies, economies of scale, competitive supply chains and improving the developer experience. Costs for electricity from utility-scale solar photovoltaics (PV) fell 85% between 2010 and 2020.
3) New solar and wind projects are increasingly undercutting even the cheapest and least sustainable of existing coal-fired power plants. IRENA analysis suggests 800 GW of existing coal-fired capacity has operating costs higher than new utility-scale solar PV and onshore wind, including USD 0.005/kWh for integration costs. Replacing these coal-fired plants would cut annual system costs by USD 32 billion per year and reduce annual CO2 emissions by around 3 Gigatonnes of CO2.
Chart 2: Renewable Energy Costs Decline in 2020 Compared to 2019; Source: IRENA
Along with reviewing overall cost trends and their drivers, the report analyses cost components in detail. The analysis spans around 20,000 renewable power generation projects from around the world, along with data from 13,000 auctions and power purchase agreements for renewables.
The cost of electricity from solar and wind power has fallen, to very low levels. Since 2010, globally, a cumulative total of 644 GW of renewable power generation capacity has been added with estimated costs that have been lower than the cheapest fossil fuel-fired option in each respective year. In emerging economies, the 534 GW added at costs lower than fossil fuels, will reduce electricity generation costs by up to USD 32 billion this year.
Chart 3: Solar and Wind Power Projects Power Generation Costs Decline 2010 - 2020; Source: IRENA
The year 2020 was marked by the global pandemic and the subsequent economic and human toll it took as the COVID-19 virus spread. One bright spot, however, was the resilience of renewable power generation supply chains and record growth in the new deployment.
In 2020, a total of 162 GW of the renewable power generation capacity added had electricity costs lower than the cheapest source of new fossil fuel‑fired capacity. This was around 62% of total net capacity additions that year. In emerging economies, where electricity demand is growing and new capacity is needed, these renewable power generation projects will reduce costs in the electricity sector by at least USD 6 billion per year, relative to the cost of adding the same amount of fossil fuel‑fired generation.
The more information about the cost of renewable energy you may read here: IRENA Power Generation Costs Report 2020
The more information about the global renewable power market in including full contact details of renewable project owners and developers you may read here: Global Renewable Energy Market Outlook 2021 ÷ 2030 - Industry Insights, Trends, Opportunities, Investments and Forecasts
To download the executive summary brochure with sample pages, please access from here: Global Renewable Energy Market Outlook 2021 ÷ 2030 - Industry Insights, Trends, Opportunities, Investments and Forecasts - Sample
For a better understanding of the benefits of using our reports, you may read here: Benefit List - Reports of Renewable Market Watch - 2021
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