Renewables are now the world’s cheapest source of energy and the future of power generation.
Last year, a report by the International Renewable Energy Agency (IRENA) noted a global tipping point for renewable energy. The report revealed that in 2020, 62 percent of renewable energy projects built that year were cheaper than those using fossil fuels. This was double the equivalent share from the previous year and marked the point that renewable power became the cheapest source of energy.
This is primarily the result of renewables dramatically dropping in price. For example, new large-scale solar projects were 80 percent cheaper to build in 2020 than in 2010. Both onshore and offshore wind prices have similarly fallen by around 50 percent over the decade. This is encouraging, as the world faces the significant environmental challenge of slowing global warming.
There is still a lot of work to do
Fossil fuels currently account for around 80 percent of global greenhouse gas emissions. This must change to achieve the ‘net zero’ target many countries agreed to at the recent COP26.
The most urgent reduction needs to be the use of coal. Worryingly, some more coal-dependent nations – such as China, India, and the USA – didn’t commit to the COP26 Coal to Clean Power Transition Agreement. China alone consumes 54 percent of global coal, with India and the US coming in a distant second and third.
Many countries are switching to natural gas as an alternative. While better than coal, the rising demand for power should mean it’s just a stop-gap measure. It still emits greenhouse gases, and there are concerns that its use will delay the drop in carbon emissions.
Cheaper renewables will help us turn the corner
While the transition to renewable energy will take time and prices vary from place to place, this turning point means the uptake of clean energy will increase dramatically. For the first time, it makes sense both economically and environmentally. For example, IRENA estimates that it would be cheaper to replace 61 percent of the USA’s coal capacity with renewable energy sources. The move would save the country $5.6 billion and 332 million tons of carbon dioxide a year.
These savings can be found in other countries as well. Most notably, a recent analysis by BloombergNEF found it was now cheaper to build a new large-scale solar farm than run an existing gas or coal-powered plant in many countries - including China and India.
Emerging economies everywhere are also likely to feel the benefits. IRENA calculated developing countries would save up to $156 billion (over a renewable project’s lifespan) from those added in 2020 alone.
Although the world is far from hitting the targets needed to stop global warming, making renewable energy production cheaper than fossil fuels is a huge step. Cynics may question the commitment of some nations toward cleaner energy; others might point out the unfairness of wealthier countries having pumped out greenhouse gases for centuries.
However, now that renewables are cheaper per Gigawatt than fossil alternatives, they will soon be embraced by all. It will take time, but we are heading in the right direction.