Renewables prove resilient against fossil fuel recovery

According to the International Renewable Energy Agency (IRENA), renewables are remaining competitive despite fossil fuel prices returning closer to historical cost levels

These findings were revealed in the Renewable Power Generation Costs in 2023 report, released by IRENA at the Global Renewables Summit during the UN General Assembly in New York. It showed that the years of falling costs and improving technology for renewables (particularly in regard to solar and wind), has made the socio-economic and environmental benefits of renewable energy development uniquely compelling.

As such, the organisation has shown that of the 473GW of renewables added in 2023, 81% had lower costs than their fossil fuel alternatives. The report also found that the renewable power deployed globally since 2000 has saved up to US$409bn in fuel costs within the power sector.

“Renewable power remains cost-competitive vis-à-vis fossil fuels,” remarked IRENA’s director-general Francesco La Camera. “The virtuous cycle of long-term support policies has accelerated renewables. In return, growth has led to technology improvements and cost reductions. Prices for renewables are no excuse anymore, on the contrary. The record growth of renewables in 2023 exemplifies this. Low-cost renewables represent a key incentive to significantly increase ambition and triple renewable power capacity by 2030, as modelled by IRENA and set by the UAE Consensus at COP28.”

Triple renewable target

The goal of tripling renewables by 2030 was set at COP28 and requires global renewable energy capacity to reach 11.2TW by the end of the decade. This averages out to 1,044GW of new capacity added annually in this time. Previously, IRENA has warned that the world is at great risk of missing this target and the new report offers advice to ensure this is not the case.

Principally, it suggests that progress must be supported by key energy transition enablers such as storage. Battery storage project costs have dropped by 89% between 2010 and 2023, facilitating the integration of high shares of solar and wind capacity by helping address grid infrastructure challenges.

“In the coming years, remarkable growth across all renewable energy sources is expected, giving countries great economic opportunities,” added La Camera. “Our analysis indicates that solar PV and onshore wind will have the biggest impacts on the tripling of renewables. Thanks to low-cost renewables in the global market, policy makers have an immediate solution at hand to reduce fossil fuels dependency, limit the economic and social damage of carbon-intensive energy use, drive economic development and harness energy security benefits.”

In 2023, the global weighted average cost of electricity from newly commissioned renewable projects across most technologies fell, for solar photovoltaics by 12%, for onshore wind by 3%, for offshore wind by 7%, for concentrating solar power by 4% and for hydropower by 7%.

In non-OECD economies where electricity demand is growing and new capacity is needed, renewable power generation projects with lower costs than fossil fuel-fired equivalents for their country and region will significantly reduce electricity system costs over the life of their operation.