Renewable energy sources are quickly replacing fossil fuels as the cheapest source of electricity. Thanks to last year's rise in fuel prices, it is now a clear winner in terms of profitability.
For decades, solar and wind power have been much more expensive than fossil fuels, and most projects have relied on government subsidies to survive. But due to rapidly declining costs, renewable energy is now matching or outperforming conventional energy sources in many markets.
According to a new report from the International Renewable Energy Agency (IRENA), this transition has accelerated significantly. Thanks in large part to a spike in fossil fuel prices, 86% of the new renewable grid capacity to be commissioned in 2022 costs less than electricity generated from fossil fuels. This is despite prices of all kinds rising around the world due to rising inflation and supply chain disruptions due to the Covid pandemic and the war in Ukraine.
Francesco La Camera, CEO of the International Renewable Energy Agency (IRENA), said that the year 2022 is a real turning point in the deployment of renewable energy sources, as their cost competitiveness has never been higher, despite the continuing increase in the cost of renewable energy. Raw materials and equipment all over the world. In a press release. .
These figures are the latest to show a sharp decline in renewable energy prices in recent years. In 2010, solar power was 710 percent more expensive than the cheapest fossil fuel option, while onshore wind power was 95 percent more expensive, according to the report.
Last year, the average cost of solar-generated electricity fell by 3%, about a third less than the world's cheapest fossil fuels, while the cost of onshore wind fell by 5% to just under half of the cheapest fossil fuels.
However, according to the report, the cost reductions were not evenly distributed. China's expansion has led to significant improvements in both solar and onshore wind energy. If the Asian giant is excluded from the calculations, the average cost of wind energy on Earth will remain unchanged. In countries such as France, Germany and Greece, the cost of solar energy has increased significantly.
Spending on hydropower and offshore wind projects also increased in 2022. The former rose by 2% due to a lower level of implementation in China, while the latter rose by 18% due to the approval of some large projects.
However, the report found that cumulative renewable energy capacity deployed worldwide since 2000 would have saved $521 billion in fuel costs by 2022. Fossil fuels after the increase. Since the comprehensive energy crisis unfolded last year, highlighting the benefits of renewable energy in the field of energy security.
“The regions most affected by historical price shocks have shown exceptional resilience, thanks in large part to the amazing growth in solar and wind energy over the past decade,” La Camera said.
While renewable energy facility costs have risen, the report says overall fossil fuel prices have risen much more. Assuming that prices remain high, the authors conclude that this will lead to structural changes in the energy market, and renewables will become the cheapest source of energy in the world.
It remains to be seen whether this change in spending dynamics will be enough to avert the climate crisis. The chamber says the annual expansion of renewables must reach 1,000 gigawatts per year by 2030 if we are to maintain the goal of limiting global warming to 1.5 degrees. This is an ambitious goal that requires full support from market forces.
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