IRENA's Report titled, 'Renewable Power Generation Costs 2017' shows that onshore wind energy is now cost competitive with fossil fuel-based power generation.
Based on current trends in cost declines, the publication estimates that in 2020 all forms commercialized renewable power generation will be cost competitive.
The main drivers for cost declines in renewable energies are technological improvements and competitive auctions for energy generation contracts in which renewable sources increasingly emerge as least cost options.
13 January 2018: The International Renewable Energy Agency (IRENA) has released a report titled, ‘Renewable Power Generation Costs in 2017.’ The publication finds that onshore wind power is now cheaper than, or as expensive as, any other source of power and predicts, based on current trends in technologies and prices, that all forms of renewable energy will become cost-competitive with fossil fuels by 2020.
Released during the eighth session of the IRENA Assembly, the study provides a comprehensive overview of the trends of all forms of renewable power technologies based on the latest available data regarding cost and prices established at auctions for power generation contracts. The analysis shows that renewable power generation costs are continuously falling with the cheapest contracts for wind and photovoltaic (PV) solar already competing with fossil fuel-based generation in many regions.
The assessment uses global levelized cost of electricity (LCOE) to compare the cost of power generation from different sources. The average LCOE of onshore wind power has fallen by 23% between 2010 and 2017 reaching US$6 cents/kWh in 2017. Recent auctions have routinely commissioned onshore wind energy for US$4 cents/kWh equal to the cheapest competitors. The cost of utility-scale PV solar has fallen 75% between 2010 and 2017 reaching global LCOE of US$10 cents/kWh with recent record low prices of US$3 cents/kWh or below in places such as Abu Dhabi, Chile, Dubai, Mexico and Peru. New bioenergy and geothermal projects were commissioned at average costs of US$7 cents/kWh.
“Turning to renewables for new power generation is not simply an environmentally conscious decision, it is now – overwhelmingly – a smart economic one.” Adnan Amin, IRENA Director-General
The decline in prices is driven by both technology improvements and the more widespread use of competitive auctions for energy generation contracts in which renewable energy sources increasingly offer lower cost options than other types of power generation. Based on current trends in technology and prices, IRENA predicts that in 2020 all currently commercialized renewable power generation technologies will be able to undercut fossil fuels with LCOE in the range of US$ 3-10 cents/kWh.
Commenting on the report’s findings, IRENA Director-General Adnan Amin said the dynamic signals an important shift in the energy paradigm, noting that cost declines indicate how renewables are disrupting the global energy system. He added that “turning to renewables for new power generation is not simply an environmentally conscious decision, it is now – overwhelmingly – a smart economic one.” [IRENA Press Release] [Key Findings] [Executive Summary] [Publication: Renewable Power Generation Costs in 2017][SDG Knowledge Hub summary of the eighth session of the IRENA Assembly]