17 January 2015: A report by the International Renewable Energy Agency (IRENA) on the costs of generating electricity from renewable energy sources has found that power from a number of these sources is now competitive with, or cheaper than, fossil fuel-based electricity. According to the Agency, renewable sources outperform fossil fuels particularly when externalities, such as local pollution and negative environmental and human health impacts are accounted for.

The IRENA report, titled ‘Renewable Power Generation Costs in 2014,’ explores global renewable power market trends, examining the costs of wind, solar photovoltaics (PV), concentrated solar power (CSP), hydropower, biomass and geothermal power generation, and estimating cost reductions to 2025.

The report finds that, in 2013 and 2014, the cost competitiveness of renewable power generation technologies continued to improve from previous years. For the 1.3 billion people who lack access to electricity, renewables are currently the cheapest source of energy. Currently, biomass, hydro, geothermal and wind power are competitive with, or cheaper than, coal, oil and natural gas-fuelled electricity. IRENA points out that these sources remain competitive despite falling oil prices. The study also finds that the levelized cost of electricity (LCOE) of PV power at utility scale fell by half over the past your years.

On the future costs of renewables, the study suggests there is a positive outlook for cost reductions, in particular for new projects, but notes that, given the rapid cost declines in PV and wind technologies in the past years, future cost reductions will come from areas such as operations, maintenance and financing, and unlocking them will require a shift in policy focus.

Launching the report, Adnan Amin, Director-General of IRENA, suggested that “the plummeting price of renewables is creating a historic opportunity to build a clean, sustainable energy system and avert catastrophic climate change in an affordable way.”

The report follows the publication of an IRENA overview report on 2012 renewable electricity generation costs, which already indicated that renewable energy was becoming increasingly cost-competitive against fossil fuels. [IRENA Press Release] [IRENA Publication Webpage] [Publication: Renewable Power Generation Costs in 2014] [IISD RS Story on IRENA Renewable Costs in 2012 Report]