Renewable Power Remains Cost-Competitive amid Fossil Fuel Crisis
New IRENA report confirms: Renewable electricity is significantly cheaper than conventional
This month, the International Renewable Energy Agency (IRENA) published a report in which it examined the costs of electricity generation from renewable energy sources in 2021. IRENA concludes once again that renewable energy is by far the cheapest source of electricity compared to conventional energy.
The report shows that the cost of renewable energy in 2021 has further decreased compared to the previous year. Specifically, the average cost of electricity for onshore wind fell by 15% while the cost for photovoltaic and offshore wind fell by 13% each. Furthermore, nearly two-thirds or 163 gigawatts of new renewables commissioned in 2021 had lower costs than the cheapest existing coal-based option in the G20 states.
Overall, the development of the competitiveness of renewables is remarkable. For example, between 2010 and 2021, the average cost of electricity of newly added PV projects fell by 88%, the cost of onshore wind and solar thermal power by 68% each, and of offshore wind by 60%.
Against this background, Francesco La Camera, Director General of IRENA, states:
““Renewables are by far the cheapest form of power today. 2022 is a stark example of just how economically viable new renewable power generation has become. Renewable power frees economies from volatile fossil fuel prices and imports, curbs energy costs and enhances market resilience – even more so if today’s energy crunch continues.”
Also recommended is this interactive infographic from IRENA, which clearly illustrates the evolution of renewable energy competitiveness in the midst of the fossil fuel crisis.
Outlook: Fossil energy costs will continue to exceed renewables in 2022
According to IRENA, conventional energies will still be much more expensive than renewables in 2022. For example, the fuel and CO2 costs for existing gas-fired power plants in 2022 are estimated to be on average four to six times higher than the total operating costs for PV and wind power plants added in 2021.
The fact that renewables are already leading to significant savings is also shown by the fact that in the period January to May 2022, imports of fossil fuels worth at least 50 billion $ were avoided in Europe through the generation of solar and wind energy alone. The global addition of renewables in 2021 will reduce electricity generation costs by at least 55 billion $ in 2022, given the current fossil and nuclear fuel price crisis, according to IRENA.
In view of these clear cost advantages of renewables, it is even more incomprehensible that in Europe in particular the replacement of Russian energy supplies is being sought primarily with new LNG terminals and diversification in the import of oil, natural gas and coal. This strategy, which comes from the old thought patterns that first brought us into this fundamental dependence on Russian energy supplies, will fail again this time: The diversification of fossil energy imports will lead to a further increase in fossil energy prices, due to their scarcity also to new geopolitical tensions, and at the same time this will lead to a further rapid heating of the Earth’s atmosphere.
At the same time, replacing Russian energy supplies with renewables together with energy conservation will reduce energy costs overall, guarantee security of supply, protect the climate and avoid new geopolitical tensions. However, this requires massive acceleration laws for the expansion of solar and wind power, bioenergy, hydropower etc, similar to those similar to the recently enacted laws for LNG terminals in Germany. We finally need those legislative changes that will lead to a fireworks display of the expansion of renewables. Then, in combination with energy savings, we will also able to get through the next winter safely, even if Russian natural gas supplies continue to be halted, and we will also reduce energy costs.
