Renewable Power Generation Costs in 2019

Renewable Energy (Other Energy Resources) / Resource Evaluation

The International Renewable Energy Agency (IRENA) serves as the principal platform for international co-operation, a center of excellence, a repository of policy, technology, resource and financial knowledge, and a driver of action on the ground to advance the transformation of the global energy system. An intergovernmental organisation established in 2011, IRENA promotes the widespread adoption and sustainable use of all forms of renewable energy, including bioenergy, geothermal, hydropower, ocean, solar and wind energy, in the pursuit of sustainable development, energy access, energy security and low-carbon economic growth and prosperity.

Electricity costs from renewables have fallen sharply over the past decade, driven by improving technologies, economies of scale, increasingly competitive supply chains and growing developer experience. As a result, renewable power generation technologies have become the least-cost option for new capacity in almost all parts of the world. This new reality has been increasingly reflected in deployment, with 2019 seeing renewables account for 72% of all new capacity additions worldwide.

According to the latest cost data from the International Renewable Energy Agency (IRENA), the global weighted-average levelised cost of electricity (LCOE) of utility-scale solar photovoltaics (PV) fell 82% between 2010 and 2019, while that of concentrating solar power,(CSP) fell 47%, onshore wind 39% and offshore wind 29%, the IRENA Renewable Cost Database shows.

Costs for solar and wind power continued to fall in 2019, as equipment costs and balance of plant costs declined and, in the case of wind power, improvements in technology yielded higher capacity factors. Electricity costs from utility-scale solar PV fell 13% year-on-year in 2019, reaching USD 0.068 per kilowatt-hour (kWh). For projects commissioned in 2019, the global weighted-average LCOE of onshore and offshore wind both declined about 9% year-on-year, reaching USD 0.053/kWh and USD 0.115/kWh, respectively. Costs for CSP – still the least-developed among solar and wind technologies – fell 1% to USD 0.182/kWh.

The trend in the global weighted-average LCOE for the mature technologies of bioenergy for power, geothermal and hydropower has been more varied. These technologies represent competitive, firm power with already low costs in many cases. Between 2010 and 2019, the global weightedaverage LCOE of bioenergy for power projects fell from USD 0.076/kWh to USD 0.066/kWh – a figure at the lower end of the cost range for new fossil fuel-fired projects.

Power generation costs in 2019 amounted to around USD 0.073/kWh for newly commissioned geothermal power projects. The global weightedaverage LCOE of newly commissioned hydropower projects increased from USD 0.037/kWh in 2010 to USD 0.047/kWh in 2019. Despite this, hydropower remains very competitive, with nine-tenths of all capacity commissioned in 2019 producing power for less than the cheapest new fossil fuel-fired cost project.

Summary:

• Renewable power generation costs have fallen sharply over the past decade, driven by steadily improving technologies, economies of scale, competitive supply chains and growing developer experience.

• Costs for electricity from utility-scale solar photovoltaics (PV) fell 82% between 2010 and 2019.

• New solar and wind projects are undercutting the cheapest and least sustainable of existing coal-fired power plants. Auction results show these
favourable cost trends continuing in 2020 and beyond.

• Replacing 500 gigawatts of existing coal plants (with the highest operating costs) with new solar PV and onshore wind could:

» cut annual system costs by up to USD 23 billion per year;
» reduce annual CO2 emissions by around 1.8 gigatonnes, or 5% of last year’s global total;
» yield a stimulus worth USD 940 billion, or around 1% of global GDP.

• This comprehensive cost study, drawing on cost and auction price data from projects around the world, highlights the latest trends for each of the main renewable power technologies.

• Continuing cost declines confirm that competitive renewables are a low-cost climate and decarbonisation solution that aligns short-term economic needs with medium- and long-term sustainable development goals.

• Renewable power installations could form a key component of economic stimulus packages in the wake of the COVID-19 pandemic.

[Note: Wind and solar have a role to play in providing power in remote areas of limited populations. However, by 2022, they both have been found to be unreliable, underpowered, and a waste of space in supplying the power grid supplying large populations. Plus, although capital costs have decreased over the years, some anaylists point to the fact that with decreasing capital costs means decreasing quality of the equipment, and hence even more increasing costs to operate and maintain over their short lifetimes. For details, see (here)].