For years, we have been told that some version of renewable energy is clean and pretty, but not practical or cheap. Well, according to a recent and very thorough report, the vast majority of renewable projects are much cheaper than their fossil fuel counterparts.
The report, published by the International Renewable Energy Agency (IRENA) showed that “91% of the renewable capacity at the recently commissioned public services scale delivered energy at a lower cost than the new cheapest alternative based on fossil fuels.”
Despite Donald Trump’s support for oil and coaland despite the new Coal power plantsIt is the renewable energies that are on top.
The era of clean energy
The global energy sector is experiencing a deep and accelerating transformation. Renewable energy has reached a critical turning point. He is no longer a peripheral player, but the predetermined economic option for the new generation of energy in most of the world. And this progress was promoted by a virtuous cycle of relentless technological innovation, mass economies in manufacturing and increasingly supportive policies frames,
UN Secretary General, António Guterres gave this news in a speech in New York.
“We are at the cusp of a new era. Fossil fuels are running out of a road. The Sun is increasing in a clean energy age,” he said. “We have passed the point of no return [to fossil fuels]. “
Guterres emphasized that this is no longer about clean energy. It is the economic sense and national security. Prices and demand for fossil fuels are volatile and unpredictable. Countries are vulnerable to geopolitical agitation (only take the invasion of Ukraine of Russia of Ukraine and Israel against Iran, for example). Renewable energy has none of that.
“The greatest threat to energy security today are fossil fuels. They leave economies and people at the mercy of price shocks, supply interruptions and geopolitical agitation,” he said. “There are no price peaks for sunlight. There are no embargoes in the wind.”
“This transformation is fundamentally about the energy security and security of people.”
The bodies such as Irena or the International Energy Agency (IEA) use a metric called an energy level cost (LCOE). LCOE represents the current average net cost of electricity generation for an energy plant throughout its operational life. It is a summarized metric calculated by dividing the total costs of the life cycle of a project for its total expected production of energy. In a nutshell, the LCOE is the minimum price at which electricity must be sold for a project to reach the equilibrium point during your life.
According to Irena’s analysis, the global average LCOE for the wind on land was $ 0.034/kWh, which makes it the most affordable source of new electricity throughout the world. Photovoltaics Solar at Utility Scale (PV) followed closely at $ 0.043/kWh ($ 43/MWh), with a new hydroelectric spot at $ 0.057/kWh. These figures represent a dramatic decrease during the last decade. As a comparison, a new combined gas cycle plant, often considered the cheapest fossil fuel option, has a non -subsidized LCOE range from $ 0.045 to $ 0.115/kWh.
The economic case is resolved. For investors and policy formulators, this body of evidence indicates that the debate is no longer Yeah The new renewable energies are cheaper, but rather because.
Fossil fuels are a “fool bet”
In 2024, a record of 582 Gigawatts (GW) of new renewable capacity worldwide, an increase of almost 20% with respect to the previous year and the highest annual expansion ever recorded. This increase contributes to a reduction in prices through greater manufacturing efficiency, more competitive supply chains and experience in development of accumulated projects. In essence, the scale makes it cheaper and we are also improving in the installation and use of solar and wind energy.
This new report can even be conservative. A 2023 analysis of the IEA discovered that 96% newly installed Photovoltaic solar energy and wind capacity on land had lower generation costs than new natural coal and gas plants. Francesco La Camera, the general director of Irena, says that while the facts are clear, we must not assume progress.
“The competitiveness of renewable energy costs is today’s reality. The new fossil fuels of renewable energy in cost, offering a clear path to affordable, safe and sustainable energy.”
“The increase in geopolitical tensions, commercial tariffs and material supply limitations threaten to stop the impulse and increase costs.”
Bill Hare, Executive Director of Climate Analytics ThinkTank, told The Guardian that he hopes that he will open even more a gap between renewable energies and fossil fuels.
“Any investment in new fossil fuels is now the commitment of a fool, while joining the race to renewable energies can only bring benefits, not only cheaper jobs and energy at stable prices, but the independence of energy and access where more is needed. The regions in development such as Africa have enormous energy access needs and even even larger renewable resources. What they need now are international finance to share the revolution of the renewables.”
What renewables are still
Lcoe does not tell the whole story. There are positive and negative things that are missing. For example, LCOE does not take into account the management costs of the variability of intermittent resources such as solar energy and wind. Renewable energy networks need batteries to really take off. For years, the high cost of batteries was a great impediment to the widespread adoption of renewable energies. Irena’s report shows that the cost of battery energy storage at the level of public services has also collapsed in a surprising 93% since 2010. But we still need more storage than we have now. What was once a prohibitive complement is now an increasingly affordable and integral component of the new energy projects, and a competitive cost price.
The other thing to consider is the location. Most locations rich in resources for solar energy (deserts) and wind (plains and coasts) are often far from cities and industrial centers. The same is true for natural gas wells, but it is easier to transport natural gas than electricity.
However, LCOE also does not capture a main advantage of renewable energies: externalities. Externalities are the side effects of an economic activity that impose social costs. Fossil fuels are a main example of a product plagued by negative externalities, ranging from air and water pollution, which leads to adverse health results, such as respiratory diseases and cardiovascular diseases, to the extensive environmental degradation of extraction and transport. That does not even take into account climate change. Air pollution alone kills more than 7 million people, and much of that comes from burning fossil fuels.
However, it doesn’t matter how you see it, the new economic reality is here. The overwhelming majority of new renewable energy projects are now cheaper than its new fossil fuel counterparts. The fastest growth and the greatest returns in the next decade will probably be in technologies that allow renewable transition.
The report can be read in your total here.
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