Renewables continue to outpace fossil fuels in cost-effectiveness, as outlined in the Renewable Power Generation Costs in 2023 report released by the International Renewable Energy Agency (IRENA) at the Global Renewables Summit in New York.
The report highlights that 81 percent of the 473 gigawatts (GW) of new utility-scale renewable capacity added globally in 2023 had lower costs than their fossil fuel counterparts.
According to the IRENA report, decades of technological advancements in solar and wind energy have significantly reduced costs. In 2023, the global cost of solar photovoltaics (PV) dropped to four US cents per kilowatt hour, making it 56 percent cheaper than fossil fuel and nuclear energy alternatives. Since 2000, this transition to renewables has saved an estimated USD 409 billion in fuel costs for the power sector.
The global weighted average levelised cost of electricity (LCOE) for newly commissioned utility-scale solar PV projects fell by 12 percent year-on-year, followed by offshore wind, which saw a 7 percent drop. Onshore wind projects also saw a cost reduction, with a 3% fall compared to 2022.
The report highlights that renewable energy is now outcompeting fossil fuel-generated electricity on cost. Solar PV has experienced the most dramatic reduction, with its LCOE falling to 56 percent less than the cost of fossil fuel alternatives in 2023. This marks a stark contrast from 2010, when solar PV was 414 percent more expensive. Similarly, onshore wind’s LCOE in 2023 was 67 percent lower than fossil fuel-fired alternatives, compared to being 23 percent higher in 2010.
Moreover, the deployment of renewable energy since 2000 has contributed to a significant reduction in electricity sector fuel costs, saving at least USD 409 billion in 2023. The falling costs of battery storage have further strengthened the competitiveness of renewable energy, with a staggering 89 percent drop in costs since 2010.
IRENA’s Director-General, Francesco La Camera, emphasized that renewables have proven themselves as the most cost-effective solution: “Prices for renewables are no longer an excuse. The record growth in 2023 demonstrates that low-cost renewables offer a powerful incentive to boost renewable power capacity and reduce dependency on fossil fuels.” He called for an urgent tripling of global renewable capacity by 2030, aiming for 11.2 terawatts (TW), driven by solar and wind energy.
To achieve this, essential enablers like energy storage are critical. The cost of battery storage projects has fallen by 89 percent since 2010, further facilitating the integration of solar and wind power into global energy grids.
By 2023, the global average costs for renewable technologies, including solar PV, onshore and offshore wind, and hydropower, continued to decline. In Asia, renewable energy savings reached USD 212 billion, followed by Europe with USD 88 billion, and South America with USD 53 billion.
The report urges policymakers to align national policies and financing mechanisms to meet renewable energy targets, as outlined in the Nationally Determined Contributions (NDCs) for the Paris Agreement by 2025.
Baburajan Kizhakedath