Renewables to Be Cheaper Than Fossil Fuels by 2020

Generating electricity from renewable energy sources is not only better for the environment compared to fossil fuels, but it will also be consistently cheaper in just a few years, a new report showed.

According to a cost analysis from the International Renewable Energy Agency, the best onshore wind and solar photovoltaic projects could deliver electricity for $0.03 per kilowatt-hour by 2019, much lower than the current cost of power from fossil fuels, which ranges from $0.05 to $0.17 per kWh, EcoWatch reported.

The analysis highlights the dramatic dip in solar and wind prices over the last decade.

Onshore wind has fallen by around a quarter since 2010, with solar PV electricity costs falling by 73% in that time. Additionally, solar PV costs are expected to halve by 2020.

In the last 12 months alone, the global weighted average costs of onshore wind and solar PV stood at $0.06 and $0.1 per kWh, respectively.

Recent auction results also suggest future projects will significantly undercut these averages—onshore wind is now routinely commissioned for $0.04 per kWh.       

Additionally, record low prices for solar PV in the UAE, Chile, Mexico, Peru and Saudi Arabia have made $0.03 kWh (and below) the new benchmark.

Other types of renewable technologies, including hydropower ($0.05 per kWh), bioenergy and geothermal ($0.07 per kWh), have also been cost competitive with fossil fuels over the last 12 months, the report found.

Remarkably, the UAE-based group projects that all forms of renewables will compete with fossils on price by 2020.

"This new dynamic signals a significant shift in the energy paradigm," Adnan Z. Amin, IRENA's director general, said.

"These cost declines across technologies are unprecedented and representative of the degree to which renewable energy is disrupting the global energy system."

According to the report, the cost reductions have been driven by a number of factors, including competitive procurement practices, the emergence of a large base of experienced medium-to-large project developers competing for global market opportunities and continued technological advancements.

"Turning to renewables for new power generation is not simply an environmentally conscious decision, it is now—overwhelmingly—a smart economic one," Amin continued. "Governments around the world are recognizing this potential and forging ahead with low-carbon economic agendas underpinned by renewables-based energy systems.

We expect the transition to gather further momentum, supporting jobs, growth, improved health, national resilience and climate mitigation around the world in 2018 and beyond," he said.