As outlined in a recent study from the International Renewable Energy Agency (IRENA), the global power industry enjoyed substantial savings of $520 billion in fuel expenses over the past year due to the widespread adoption of renewable energy sources. This remarkable milestone underscores the growing competitive edge of renewables, particularly in the context of the ongoing challenges posed by fluctuating fossil fuel prices.
In 2022, a remarkable 86 percent, equivalent to 187 gigawatts (GW), of newly commissioned renewable energy capacity boasted lower costs than traditional fossil fuel-fired electricity. The report, titled ‘Renewable Power Generation Costs in 2022,’ provides detailed insights into how the introduction of renewable power contributed to substantial savings in the global electricity sector’s fuel expenses.
The report also projected substantial cost savings in non-OECD (The Organization for Economic Cooperation and Development) countries, with potential savings of around $580 billion from the lifespan of new capacity additions in 2022 alone.
Beyond the direct cost savings, the embrace of renewable energy also delivered significant economic benefits by curbing carbon dioxide emissions and local air pollutants. The IRENA report underscores that without the integration of renewables over the past two decades, the economic repercussions of the fossil fuel price shock experienced in 2022 would have been even more severe, potentially overwhelming the capacity of many governments to address through public funding.
IRENA’s report emphasizes the indispensable role of competitively-priced renewables in addressing contemporary energy and climate challenges and accelerating the transition toward meeting the 1.5°C warming limit outlined in climate agreements. As countries worldwide strive to phase out fossil fuels and mitigate the associated macroeconomic disruptions on their journey to achieving net-zero emissions, renewables are at the core of these strategies.
Francesco La Camera, the Director-General of IRENA, emphasized the pivotal nature of developments in 2022. He stated, “IRENA regards 2022 as a pivotal moment in the widespread adoption of renewables, marked by exceptional cost competitiveness even in the face of prevalent inflation in commodity and equipment costs.” He attributed the resilience observed in regions most impacted by the historic price fluctuations to the substantial growth of solar and wind energy over the past decade.
La Camera stressed the urgency of rapid transformation, stating, “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 the 1.5°C target achievable – more than three times the 2022 levels. There is no time for a gradual evolution of the energy system, as was the case for fossil fuels. This report again underscores that renewables offer countries the most viable climate solution to elevate their ambitions and take cost-competitive actions.”
The IRENA report delves into the varying trends of costs experienced by countries due to commodity and equipment cost inflation in 2022. Globally, the weighted average cost of electricity saw declines for utility-scale solar photovoltaics (PV) by 3 percent, onshore wind by 5 percent, concentrating solar power by 2 percent, bioenergy by 13 percent, and geothermal by 22 percent. However, offshore wind and hydropower experienced cost increases of 2 percent and 18 percent, respectively, attributed to factors like China’s reduced share in offshore wind deployment and cost overruns in large hydropower projects.
Ultimately, the report underscores the remarkable decline in renewable power generation costs from solar and wind sources over the past decade. Between 2010 and 2022, solar and wind power costs reached parity with fossil fuels, even without financial support, marking a significant milestone in the global transition to sustainable energy sources.
Source: Saur Energy International