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.

A few days ago, the Russian Finance Minister Anton Siluanov announced: Almost 14 billion Euros will end up in Russia’s war chest this year through the revenues from Russian energy sales. The lion’s share of this revenue, and thus of Russian war funding, comes from Germany and the EU.

Germany and the EU remain Russias biggest war financiers

All the talk of “successful” sanctions policy is nothing but self-deception. It was clear from the beginning of the war that only an immediate complete energy boycott could make a real impression on the oil elites around Putin. Germany and the EU, however, have still not managed to enforce such a boycott.

On the contrary, the uncoordinated and ill-considered governmental actions, especially to relieve energy customers from further increasing fossil energy prices, lead deeper and deeper into a dead end, so that Putin gets to feel vindicated: The fossil and nuclear energy dependency of the EU results in them continually filing the Russian war chest.

Only fossil prices are rising

In this context, it is important to finally stop talking about “energy prices” in general terms when we actually mean ”fossil prices”. Only the prices of fossil and nuclear energy have been rising massively in recent months, not those of renewable energies. The “commodity prices” of solar and wind energy, the sun’s rays and the wind are, after all, free. It is true that there is also a slight increase in the price of technology investments for renewable energies, e.g. through price increases for materials needed for construction. But unlike fossil fuels and nuclear energy, the prices of energy raw materials do not rise, which keeps the energy prices for renewable energies calculable and low in the long term.

Fiscal activities of the German government drive up geopolitical tensions and fossil energy prices 

The German government has so far relied exclusively on cosmetic fiscal activities to lower fossil energy prices and on a diversification in the purchase of oil, natural gas and coal, mostly from other warring or anti-democratic regimes (Qatar, Senegal, Colombia, etc.). It is thus driving geopolitical tensions and even fossil energy prices ever higher.

Legislation to accelerate the expansion of renewable energies or even effective energy-saving measures have not yet been passed, although this is the only way to bring about real and rapid relief in the energy price sector. Instead, ineffective fuel discounts and fossil energy price subsidies are introduced. All helpless activities that only drive up energy prices and national debt, fill Russia’s war chest and damage the climate.

In order to understand this, one must recall a few basic analyses and facts:

Energy prices are essentially determined by global crude oil prices. Natural gas, coal and electricity prices have been going up and down in a rough pattern with crude oil prices for decades. Of course, there are always special effects, such as the massive increase in electricity prices in France due to the shutdown of more than half of the nuclear power plants. But, while taxes and levies are not insignificant, they do not have the financial impact that crude oil prices do. As a result, energy tax cuts cannot compensate for sharp crude oil price increases at all – what becomes evident in the current situation around the German fuel discounts.

Crude oil prices are determined by the global interaction between supply (crude oil production) and demand (global fossil/nuclear energy consumption). If fossil demand exceeds crude oil production, fossil prices go up quickly and vice versa. For example, there even were negative crude oil prices in the short term when the global economy was in a deep recession due to the Corona virus in April 2020. Since then, the global economy has been picking up again, and oil prices have therefore risen sharply, well before the war in Ukraine. Oil demand, and with it the energy prices, will rise significantly again in the coming months, as global demand for oil, especially in the USA and Europe, will increase considerably due to the start of the travel season.

The rising energy prices with rising energy demand show that the supply cannot satisfy the rising fossil demand, a clear indication that the world has probably reached the peak of fossil energy production. This observation is reinforced by recent statements from the Organization of the Petroleum Exporting Countries (OPEC). The UAE’s energy minister, Suhail Al-Mazrouei, stated recently that the amounts, OPEC could deliver in terms of additional quantities aren´t very encouraging. In his opinion, oil prices are nowhere near their highs. Even though there are feverish and highly climate-damaging activities by the fossil fuel industry to open up new oil fields, they are clearly not strong enough to satisfy the increased fossil energy demand. Analyses of the Energy Watch Group have shown for years that this will even worsen massively in the coming years due to the massive productivity decline  from the oil fields that have been exploited for decades.

Tax measures such as fuel discounts can never lower fossil energy prices

To put it in a nutshell: Due to insufficient promotion and expansion of renewable energies, every increase in demand drives up fossil energy prices. Conversely, only a reduction (conversion to renewable energies, energy saving measurements) of fossil energy use can lower fossil energy prices, whereas tax measures such as fuel discounts never can.

Being aware of these principles, it is easy to understand that the recent actions of the federal government have no chance of relieving the burden on fossil energy customers. Energy tax cuts, fuel discounts, direct energy price support from the state budget – all these instruments lead to an increase in demand for fossil energy and thus contribute to the opposite effect of what is desired: Fossil energy prices rise with the increased demand and with them the national debt in Germany, Russian energy revenues as well as the earth’s temperature.

Of course, it is right to support low-income households financially in the light of the high energy prices, e.g. for their journey to work. But, the instruments must be targeted specifically at this group. However, what is happening now with fuel discounts and related instruments is a scattergun approach. Everyone, including those from the middle and upper classes, are now being given a lump-sum tax break, which only leads to increased demand. Despite high fuel prices, traffic on motorways and rural roads has increased massively this spring.

Tourist air traffic is also increasing massively again and with it the demand for crude oil. To such extent  KLM and other airlines have stopped selling tickets and cancelled flights because their staff, permanently reduced by the Corona crisis, has no chance of handling the surge in air tourists.

There is a lack of large-scale energy saving campaigns

Against this background, where are the governments appeals to save energy?  Where are the energy saving campaigns that call on citizens to the Sunday lake trip by bike or public transport or to spend the summer holidays at home instead of jetting around the world in order to stop Russian war financing?

Instead, ministers and the chancellor continue to travel all over the world – to Qatar, Senegal, Israel, Jordan – to purchase the highly climate-damaging LNG gas from other regions of the world to substitute Russia’s energy supplies and to meet the continuing high demand for fossil fuels. The fact is, that won’t help either, because all these natural gas and oil producing regions simply will not have much more natural gas and oil out of a sudden. They can only change their supply routes. Instead of delivering their previous customers in Pakistan, India, Japan, China and others, oil and LNG tankers are now being diverted to Europe as they pay higher prices.

The oil multinationals are happy about the massive increase in profits.  A special tax will hardly be enforceable against them as multinationals and would not help to lower fossil energy prices anyway.

LNG from the U.S. is no secure source of energy

One example, that shows very clearly that this fossil diversification is an erroneous path and that supply of LNG imports – also from the USA – is by no means secure, is the recent explosion of an LNG production plant of the Freeport company. The company now had to stop its production. As this plant handles about 20% of the LNG processing in the US, this event will also lead to bottlenecks in Europe and thus to further increases in the price of natural gas.

Renewables are the only way out of the looming fossil energy price spiral

There is only one effective strategy to break the looming fossil energy price spiral that continues to drive upwards: A rapid and radical switch to renewable energies in combination with energy savings. However, exactly these aspects are neglected irresponsibly by the German government and the EU.

Guest article by Dr. Rudolf Rechsteiner, EWG network member and President of the Ethos Foundation

EU taxonomy – It’s all about public funds

Much has been written about the EU Commission’s misguided decision to retroactively include nuclear energy and natural gas in the sustainability taxonomy. On the surface, it’s about private investments and greenwashing. But the nuclear lobbyists are interested in something else.

Rarely has the EU Commission disgraced itself as much as it did now with its plan to enrich the originally good EU taxonomy for “green investments” with gas and nuclear power plants. The responsible EU Financial Market Commissioner Mairead McGuin-ness defended herself, saying it was all about “transitional technologies”, and adding by the way: “coal kills!” – as if coal-fired power plants were still planned in the EU. The authoritative Platform for sustainability finance criticized the decision very sharply and pointed out that the old coal-fired power plants in Europe will cease to operate anyways as thanks to stricter CO2 emission-trading they can no longer be operated economically. In addition, the platform criticized the lack of trustworthy verification processes for the alleged sustainability of fossil gas and nuclear power plants. The annex of the EU Commission contradicts the Do No Significant Harm requirement, which is the basis of the taxonomy.

Lobbyism and power games

The highly controversial EU decision reveals that even the highest executive body in Brussels is by no means immune to power games, heavy-handed lobbying and disinformation.

 The original criteria of the taxonomy were consistent:

– Climate protection and adaptation to climate change.

– Sustainable use and protection of water and marine resources.

– Transition to a circular economy.

– Pollution prevention and control.

– Protection and restoration of biodiversity and ecosystems.

The word of power from Brussels undermines the taxonomy and indirectly harms all green-oriented financial products. Those who are running sustainable funds will have to explain themselves from now on. For many providers, it may be popular to clearly distance themselves from the annex from Brussels, for good reasons.

The history of commercial nuclear energy records five serious reactor accidents with core meltdowns: Three Mile Island (1979), Chernobyl (1986), Fukushima 1 to 3 (2011). The consequential costs cannot yet be quantified conclusively.

The disposal of highly radioactive waste poses puzzles. A reliable proof for the next 100’000 years cannot be provided. The Sustainability Platform points out that the costs for the disposal of existing nuclear power plants are already insufficiently covered (Response to the Complementary Delegated Act).

Globally, no insurance company can be found that offers liability insurance against severe nuclear accidents. Recent new nuclear power plants in Europe are experiencing exorbitant cost and construction time overruns, making them – and their owners – very unpopular on the stock market. The glossy annex won’t change that.

Gas-fired power plants can only be named “green” if they are fed with gas from renewable sources. Instead of hydrogen and e-fuels, there exist other cheaper flexibilities on the electricity market. Thermal storage or contractual load shedding by large consumers that can align with cheap, fluctuating renewables.

The day-ahead markets on the German electricity exchange recorded 298 annual hours with negative prices (2020). The trend towards “cheap sunshine hours” in the electricity market is enabling new business models for flexible energy-intensive industries that operate without fossil gas-fired power plants.

Large-scale batteries and the further development of intra-European electricity trading are also cheaper and suitable for providing the necessary back-up for solar and wind power with already existing water storage systems. In the USA as well as in Australia, batteries with the capacity of coal-fired power plants are replacing new gas-fired power plants. Germany has slept through this trend, hence the greenwashing of natural gas. As with the fairy tale of the “clean diesel,” there is a huge need to catch up. With technology-neutral incentives and a de-blocking of grid expansion, new fossil gas-fired power plants would be unnecessary.

Money for the “nuclear renaissance”

Alleged transitional technologies being built now will remain in operation for decades. Building new capacity with inflexible base load will lead to renewable energy curtailment, much to the detriment of the desired transformation.

The intent behind the absurd “Annex” is not to attract private investment. The question with nuclear power was, and still is, how to get to new governmental subsidies in a supposedly competitive electricity market. The EU’s “Green Deal” includes a budget of over 1000 billion euros, based on revenues from CO2 certificates and unclaimed Covid credits.

Lazard, a New York-based investment bank, provides annual cost comparisons for electricity from new power plants. New nuclear power plants have become risky and effectively unaffordable for private investors. Wind and solar power are now four times cheaper. The pro-nuclear EU member states want to see the “nuclear renaissance” paid for by Brussels, by subsidies from the “Green Deal”. For this reason, the obsolete risk technologies need a green coat. Hence the new taxonomy. Private investors who are serious about responsible investment will be left out in the cold.

New studies show that the fossil fuel dependent countries can switch to fully renewable electricity systems and achieve zero-carbon emissions till 2050.

March 17, 2017, Berlin/Lappeenranta – In India, Iran and Nigeria electricity supply fully based on renewable energy sources and storage is feasible until 2050 and is more cost-efficient than other existing energy supply options. This is the result of a series of studies by researchers of the Lappeenranta University of Technology, including authors from the respective countries.

The fully renewable electricity systems in India, Iran and Nigeria would be 60-70% cheaper than the so-called “low-carbon” energy options, including nuclear power or the fossil fuel energy combined with the CCS.

“All the three countries have abundant renewable energy sources and will be facing a rising energy demand in the coming years and decades. The transformation of the fossil fuel dependent economies can solve energy security issues and drive the economic growth”, Christian Breyer, Professor for Solar Economy at the Lappeenranta University of Technology and Co-chairman of the Energy Watch Group scientific board said.

The new studies have modeled on a full hourly resolution the energy sectors electricity, desalination and industrial gas in India, Iran and Nigeria, fully based on renewable energy and storage. According to the studies, solar PV and battery storage will play a dominant role in the electricity mix, given their falling costs and given the fact that all three countries belong to the global Sun Belt. Meanwhile, the industrial gas demand can be covered entirely by a mix of biomethane and power-to-gas processes.

“The studies show that investments in new coal and nuclear power plants are no longer necessary and will lead to stranded investments. Climate protection and the avoidance of radioactive hazards are feasible and enable cost-effective energy security,” President of the Energy Watch Group Hans-Josef Fell said.

In India, solar PV and storage will form the backbone of a fully renewable electricity system. In times of low radiation and the monsoon season, wind and hydropower will help to sustain the energy supply, but also solar electricity harvested in other Indian regions not affected by the monsoon and transmitted by the power grid. In Iran, wind energy will be dominant until 2030 with solar PV taking over thereafter. In Nigeria, the study shows a phase out of fossil gas can take place already by 2040, resulting in a solar PV and battery storage dominated electricity system.


Share of different energy sources used for power generation in total electricity production in Iran

According to the studies, the costs for one MWh will vary between €37-42 in India, €32-44 in Iran and €35-38 in Nigeria in the year 2050. The overall costs covering production, storage and curtailment will be cheaper than conventional energy sources. For instance, new nuclear power costs some €110 per MWh and the fossil fuel energy plus CCS option some €120 per MWh. The study on Iran shows that if energy transition takes place slower than its potential is, it would cause higher cost for the energy system in the double digit billion € order.

“It is now a matter of favourable policies and financial schemes supporting investments in renewable energy to further accelerate the already impressive exponential growth of renewables and to turn these study results into reality”, Breyer said. “And if India, Iran and Nigeria switch to 100% renewable energy then other countries in their respective regions will most likely follow them as role models”.


India: paper and presentation
Iran: paper and presentation
Nigeria: paper and presentation

Zero-carbon economy needed to meet Paris Agreement

November 4, 2016, Berlin – Germany’s current climate targets are too weak and fall short of meeting the Paris Climate Agreement. Meanwhile, the German government is on track to missing even these weak climate targets, a new study by the Energy Watch Group and the Association for the Study of Peak Oil and Gas (ASPO) Germany shows.

The Paris Agreement is entering into force today. Yet, the former climate leader Germany is most likely to take off to the world climate conference COP22 in Marrakesh without a Climate Action Plan in place – and is turning into a climate sinner.

“The federal government needs to completely rewrite its Energy Concept and climate targets. The greenhouse gas emission reduction target of 80-95% by 2050 compared to 1990 levels is inadequate to meet the Paris targets”, Hans-Josef Fell, co-author of the study, President of the Energy Watch Group, and Member of the German Parliament 1998-2013 says.

“Current climate protection measures do not bring about any significant emissions reduction. Global temperature is increasing at unprecedented speed. Given the consequences we already observe today, any further increase of global temperatures – 1.5°C or less – should be unacceptable. The target should be a cooling to preindustrial levels”, Fell adds.

The new study ‘German Climate Policy – From Leader to Laggard’ proves that the emissions reduction pathway in Germany has been surpassed every year since 2010. Especially the transport, electricity and agricultural sectors have contributed to this transgression. According to the government projections, in its most ambitious scenario, the transport sector for example will exceed the set 2035 targets by a striking 91%.

“The emissions reduction pathway from 2010 was already exceeded years ago. With the new more ambitious targets of the Paris Agreement in place, additional and stronger measures are now needed. The aim should be a zero-carbon economy by 2030”, Jörn Schwarz, author of the study and chairman of ASPO Germany says.

A global zero-carbon economy should go hand in hand with the creation of effective carbon sinks and requires a range of measures on the policy and technical level. The study shows that 100% renewable energy as well as a functioning circular economy is essential. The study authors recommend including climate protection into the constitution; creating incentives for private investments into climate change protection; and promoting research and education in this field.

“This study clearly shows that the current German energy policy removes any possibility to meet the Paris climate targets. Compared to the ambitious measures of other countries, Germany is increasingly lagging behind on its climate protection action. The federal government is jeopardizing the livelihoods of current and future generations, and the competitive advantage of the country“, Dr. Volker Quaschning, Professor for regenerative energy systems at HTW Berlin, and peer reviewer of the study says.

The study is currently only available in German. You can find it here.