Record growth reinforces cost advantage of renewables

Of the additional 473 gigawatts (GW) recorded in 2023, 81% or 382 GW of new large-scale renewable energy projects commissioned had lower costs than their fossil fuel-fired alternatives.

IRENA's new report shows that after decades of falling costs and improving technologies, particularly in solar and wind, the socio-economic and environmental benefits of deploying renewable energy are now particularly compelling.

With its global costs dropping dramatically to around 4 US cents per kilowatt-hour in just one year, by 2023, solar PV was 56% cheaper than fossil fuels and nuclear power. Overall, renewables deployed worldwide since 2000 have saved up to US$409 billion in fuel costs in the electricity sector.

For Francesco La Camera, Director General of IRENA: “Renewables remain cost-competitive with fossil fuels. The virtuous circle of long-term supportive policies has accelerated the development of renewables. In turn, this growth has led to technological improvements and cost reductions. Renewable energy prices are no longer an excuse, quite the opposite. The record growth of renewables in 2023 is a case in point. Low-cost renewables represent a key incentive to significantly increase ambition and triple renewable energy capacity by 2030, as modelled by IRENA and set out in the UAE consensus at COP28.”

To achieve the renewables tripling target, global renewables capacity would need to reach 11,2 TW by 2030, representing an average addition of 1.044 GW of new capacity per year until 2030. According to IRENA's Global Energy Transitions Outlook, 8,5 TW would come from solar PV and onshore wind alone.

Most importantly, the tripling target must be accompanied by key energy transition measures, such as storage. Battery storage project costs have fallen by 89% between 2010 and 2023, facilitating the integration of high shares of solar and wind capacity by helping to address grid infrastructure challenges.

For Francesco La Caméra: "In the coming years, we can expect considerable growth in all renewable energy sources, opening up great economic prospects for the countries."

This analysis indicates that solar PV and onshore wind will have the greatest impact on tripling renewables. With low-cost renewables on the global market, policymakers have an immediate solution to reduce dependence on fossil fuels, limit the economic and social harms associated with the use of carbon-intensive energy, stimulate economic development, and exploit energy security benefits.

In 2023, global weighted average costs of electricity from new renewable energy projects decreased across most technologies: 12% for solar PV, 3% for onshore wind, 7% for offshore wind, 4% for concentrated solar power (CSP), and 7% for hydroelectric power.

In non-OECD economies where electricity demand is increasing and new capacity is needed, renewable energy projects that cost less than fossil fuel equivalents for their country and region will significantly reduce electricity system costs over their lifetime.

In 2023, Asia recorded the largest cumulative economies over the period 2000-2010, estimated at USD 212 billion, followed by Europe (USD 88 billion) and South America (USD 53 billion).

Renewable energy generation has become the default source of least-cost new energy generation. Policymakers and stakeholders must ensure that policies, regulations, market structures, support instruments, risk reduction mechanisms and financing are rapidly aligned with the tripling goal and submitted to the next round of Nationally Determined Contributions (NDCs) to the Paris Agreement in 2025.

Read the full report Renewable energy production costs in 2023.

Illustrative image of the article via Depositphotos.com.