Abu Dhabi, United Arab Emirates, 29 August 2023 – The fossil fuel price crisis has accelerated the competitiveness of renewable power. Around 86 per cent (187 gigawatts) of all the newly commissioned renewable capacity in 2022 had lower costs than fossil fuel-fired electricity. Contact online >>
Abu Dhabi, United Arab Emirates, 29 August 2023 – The fossil fuel price crisis has accelerated the competitiveness of renewable power. Around 86 per cent (187 gigawatts) of all the newly commissioned renewable capacity in 2022 had lower costs than fossil fuel-fired electricity.
Renewable Power Generation Costs in 2022, published by the International Renewable Energy Agency (IRENA) today shows that the renewable power added in 2022 reduced the fuel bill of the electricity sector worldwide. New capacity added since 2000 reduced the electricity sector fuel bill in 2022 by at least USD 520 billion. In non-OECD countries, just the saving over the lifetime of new capacity additions in 2022 will reduce costs by up to USD 580 billion.
In addition to these direct cost savings, there would be substantial economic benefits from reducing CO2 emissions and local air pollutants. Without the deployment of renewables over the last two decades, the economic disruption from the fossil fuel price shock in 2022 would have been much worse and possibly beyond many governments ability to soften with public funding.
IRENA’s new report confirms the critical role that cost-competitive renewables play in addressing today’s energy and climate crises by accelerating the transition in line with the 1.5°C warming limit. Renewables represent vital planks in countries’ efforts to swiftly reduce, and eventually phase out, fossil fuels and limit the macroeconomic damage they cause in pursuit of net-zero emissions.
IRENA’s Director-General Francesco La Camera said: “IRENA sees 2022 as a veritable turning point in the deployment for renewables as its cost-competitiveness has never been greater despite the lingering commodity and equipment cost inflation around the world. The most affected regions by the historic price shock were remarkably resilient, in large part thanks to the massive increase of solar and wind in the last decade.”
“Today, the business case for renewables is compelling, but the world must add 1 000 GW of renewable power annually on average every year until 2030 to keep 1.5°C within reach, more than three times 2022 levels. There is no time for a new energy system to evolve gradually as was the case for fossil fuels. In preparation of the COP28 in Dubai later this year, today’s report shows once again that with renewables, countries have the best climate solution at hand to raise ambition and take actions in a cost-competitive way.”
Commodity and equipment cost inflation in 2022 resulted in countries experiencing markedly different trends in costs in 2022, IRENA’s new report finds. However, at a global level, the weighted-average cost of electricity fell for utility-scale solar PV by 3 per cent, for onshore wind by 5 per cent, for concentrating solar power by 2 per cent, for bioenergy by 13 per cent and for geothermal by 22 per cent.
Only the costs for offshore wind and hydropower increased by 2 per cent and 18 per cent respectively, due to the reduced share of China in offshore wind deployment in 2022 and cost overruns in a number of large hydropower projects.
For the last 13 to 15 years, renewable power generation costs from solar and wind power have been falling. Between 2010 and 2022, solar and wind power became cost-competitive with fossil fuels even without financial support. The global weighted average cost of electricity from solar PV fell by 89 per cent to USD 0.049/kWh, almost one-third less than the cheapest fossil fuel globally. For onshore wind the fall was 69 per cent to USD 0.033/kWh in 2022, slightly less than half that of the cheapest fossil fuel-fired option in 2022.
IRENA’s report concludes that expected high fossil fuel prices will cement the structural shift that has seen renewable power generation become the least-cost source of new generation, even undercutting existing fossil fuel generators. Renewables can protect consumers from fossil fuel price shocks, avoid physical supply shortages and enhance energy security.
Read the full report Renewable Power Generation Costs in 2022.
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The solar energy market has grown significantly in recent years, driven by technological advances and declining costs. It is expected to continue its growth trajectory as countries and companies transition to cleaner energy sources to combat climate change. The market includes a range of products such as solar panels, solar batteries, and solar inverters, which are used in residential, commercial, and industrial applications.
The energy market is expected to continue growing, with increasing demand for energy worldwide as populations grow and economies develop. However, the mix of energy sources is expected to shift towards cleaner and more sustainable options, with renewable energy sources like solar, wind, and hydropower projected to continue growing rapidly. Fossil fuels are expected to gradually decline in importance, although they are likely to remain significant contributors to the global energy mix for several decades, especially in countries that rely almost totally on fossils.
The outlook for the nuclear power market varies depending on the region and country. In some countries, such as China, nuclear power is expected to continue to grow and be an important part of their energy mix. However, in other countries, such as Germany and Japan, there are plans to phase out nuclear power in the coming years. Additionally, the development of new nuclear power projects has been slow due to several factors, including safety concerns, public opposition, and high costs. The construction of new nuclear power plants has also faced delays and cost overruns. The ongoing Russia-Ukraine war has far-reaching effects on the nuclear market, as sanctions imposed on Russia cast doubts on the future of its nuclear industry in the global arena.
The data encompasses B2B enterprises. Figures are based on the value of electricity production in the energy market.
Market sizes are determined through a bottom-up approach, building on specific predefined factors for each market segment. As a basis for evaluating markets, we use resources from the Statista platform as well as annual reports of the market-leading companies and industry associations, third-party studies and reports, national statistical offices, international institutions, and the experience of our analysts.
In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting electricity generation due to the non-linear growth of this market, especially because of the direct impact of climate change on the market.
The impact of the COVID-19 pandemic and the Russia-Ukraine war are considered at a country-specific level. The market is updated twice a year.
The world''s capacity to generate renewable electricity is expanding faster than at any time in the last three decades, giving it a real chance of achieving the goal of tripling global capacity by 2030 that governments set at the COP28 climate change conference last month, the IEA says in a new report.
The amount of renewable energy capacity added to energy systems around the world grew by 50% in 2023, reaching almost 510 gigawatts (GW), with solar PV accounting for three-quarters of additions worldwide, according toRenewables 2023, the latest edition of the IEA''s annual market report on the sector. The largest growth took place in China, which commissioned as much solar PV in 2023 as the entire world did in 2022, while China''s wind power additions rose by 66% year-on-year. The increases in renewable energy capacity in Europe, the United States and Brazil also hit all-time highs.
The latest analysis is the first comprehensive assessment of global renewable energy deployment trends since the conclusion of the COP28 conference in Dubai in December. The report shows that under existing policies and market conditions, global renewable power capacity is now expected to grow to 7 300 GW over the 2023-28 period covered by the forecast. Solar PV and wind account for 95% of the expansion, with renewables overtaking coal to become the largest source of global electricity generation by early 2025. But despite the unprecedented growth over the past 12 months, the world needs to go further to triple capacity by 2030, which countries agreed to do at COP28.
Alongside the report, the IEA also released a new Renewable Energy Progress Tracker, which allows users to explore historical data and forecasts at the regional and country level, including tracking progress towards the tripling goal.
"This report is the first key instalment of the IEA''s follow-up work on the energy outcomes of COP28 that will continue throughout 2024 and beyond," Dr Birol said. "This is based on the five key pillars we set out ahead of COP28 and covers tripling renewables, doubling energy efficiency, cutting methane emissions, transitioning away from fossil fuels, and scaling up financing for emerging and developing economies. We will be following very closely to see whether countries are delivering on their promises and implementing appropriate policies."
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