A majority of new renewable power capacity was cheaper than the cheapest fossil fuel options for the first time in 2020, a report by the International Renewable Energy Agency has found.
Almost two-thirds (62%) of the 261GW of renewable capacity installed in 2020 was able to produce electricity at less than $0.05 per kilowatt-hour, the price of the cheapest fossil fuel option, China’s coal plants.
Between 2019 and 2020, the cost of onshore wind, offshore wind and solar photovoltaics fell by 13%, 9% and 7%, respectively. Over the decade to 2020, the cost of generating electricity from solar panels fell by a total of 85%, while the costs of onshore and offshore wind fell by 56% and 48%, respectively.
The authors of the study estimate that this new renewable energy capacity will save emerging economies $6bn per year on energy costs, with $156bn saved over the lifespan of the projects.
Onshore wind will provide two-thirds of these savings ($3.9bn per year), with hydropower and solar photovoltaic projects also providing significant cost benefits ($1.3bn and $700m, respectively).
The fall in the cost of onshore wind has been driven by both a decrease in the cost of turbines and technological improvements to turbines that increase their output. In 2020, 100GW of newly installed offshore wind capacity was cheaper than the cheapest fossil fuel-fired power projects, more than double the volume seen in 2019 (42GW).
Last year saw 45.5GW of solar photovoltaic capacity installed at below the lower bound of fossil fuel generation costs, an increase of 63% on 2019. The 85% fall in the cost of solar photovoltaics since 2010 has been driven by a 93% fall in module prices.
Covid cannot dent the rise of renewable power
Despite the disruption of Covid-19, 2020 saw 50% more renewable power capacity installed than in 2019, powered largely by a doubling of newly installed wind energy capacity. Wind made up 43% of all new capacity, with solar photovoltaic projects making up a further 49%.
China alone accounted for two-thirds of newly installed onshore wind capacity and one-third of new offshore wind, as well as 45% of new solar photovoltaic capacity.
Neither nuclear energy nor fossil fuels saw similar levels of capacity growth, with the result that renewables made up 82% of all newly installed capacity in 2020, up from 72% in 2019.
Researchers examined project-level costs for 20,000 renewable energy projects, representing more than 1,900GW of capacity (68% of all renewable capacity). The metric used to measure costs, LCOE, compares the expected lifetime costs of a project with its expected lifetime electricity output.