A report published by Adnan Amin, director-general of the International Renewable Energy Agency (IRENA) earlier on this year predicted that it will only take another two years for renewable energy to become cheaper than fossil fuels.
The report looked specifically at the relative cost of new energy projects being commissioned at that time.
Continuous improvement in technology has led in recent years to a rapid fall in the cost of renewable energy. Some forms can already comfortably compete with fossil fuels.
The same report suggested that this trend would continue and that by 2020 all renewable power generation technologies now in commercial use would be expected to fall within the fossil fuel-fired cost range.
Adnan Amin said at the time:
“This new dynamic signals a significant shift in the energy paradigm.”
It is quite possible that in the future some technologies could actually undercut fossil fuels and that most will be at the lower end of the cost range.
Renewable energy is increasingly a success story in emerging and developing markets. Last year, they were leading in green energy investments. For example, China added around 54 GW solar PV capacity in 2017 — three times more than any other country had done, which tops China’s total amount to 120 GW of solar PV installed capacity.
One of the reasons for the fast-improving cost performance of the key renewable energy technologies is a growing preference for competitive bidding processes when handing out contracts to develop new power plants. At the same time there is a growing base of experienced developers competing for project opportunities around the world as well as continued advancements being made in the technologies themselves.
Experts have predicted that the more investment is put into green infrastructure projects the more the costs of energy for consumers will decrease.
The cheaper renewable energy becomes the more consumers will benefit from investment in green infrastructure.
Jonathan Marshall, energy analyst at the Energy and Climate Intelligence Unit (ECIU) told The Independent at the beginning of the year:
“If the stuff you’re building to generate electricity costs less, the end effect of that is having to pay less for the electricity that comes from it. The cheaper you install it, the better it is for everyone.”
Across G20 countries the current cost for fossil fuel power generation ranges from around 4p to 12p per kilowatt hour.
IRENA predicts that renewables will cost between 2p and 7p per kilowatt hour by 2020 with the best results expected from onshore wind and solar photovoltaic projects which could deliver electricity by 2p or less as early as 2019.
As yet other methods of producing renewable energy such as offshore wind farms and solar thermal energy are not as competitive as fossil fuels.
If, however you look at the results of recent power auctions which are a useful way to predict the future cost of electricity and note the projects to be commissioned in the years to come these renewable energy solutions are also due to drop in price.
Mr. Amin went on to say:
“These cost declines across technologies are unprecedented and representative of the degree to which renewable energy is disrupting the global energy system.”
Due to the falling costs, solar PV and battery storage will increasingly drive most of the electricity system globally, with solar PV reaching some 69%, wind energy 18%, hydropower 8% and bioenergy 2% of the total electricity mix in 2050.
The IRENA report also came after the UK had been declared to have had it’s greenest year in 2017. Data from the National Grid revealed that 13 different renewable energy records had been broken in the UK that year most notably the very first full day since the Industrial Revolution without coal power. However current UK policy may restrict the development of renewable energy capacity.
The UK could be left behind as other countries take advantage of the fall in the cost of renewable energy. Banning subsidies on new onshore wind farms could add 1bn onto energy bills in the next 5 years.
The gap will continue to widen between the cost of electricity in the UK and elsewhere until all low-carbon electricity sources are allowed to compete on equal footing
The decision to use renewables for power generation is no longer going to be just based on being environmentally conscious but one that will be determined by renewable energy making smart economic sense.
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