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The cost of renewable energy has dropped steadily over the last year, to the point where the majority of green energy sources are now competitive with fossil fuels, including oil, coal and gas-fired power plants, according to new data released recently.
Hydroelectric power is currently the least expensive source of renewable energy, averaging around $0.05 per kilowatt hour (kWh), but the average cost of brand-new facilities powered by onshore wind, biomass, solar or geothermal energy is now below $0.10/kWh for the most part. Offshore wind is slightly more expensive but still improving, sitting near $0.13/kWh.
These figures are global averages, so there may some discrepancies. That said, it is still positive news. The cost of individual projects can vary hugely, with biomass energy plants, for example, costing anywhere between $0.05/kWh and $0.25/kWh.
However, if you take fossil fuel plants into account, the numbers are actually comparable. Oil and gas typically range from $0.05/kWh to over $0.15/kWh, so within the range of renewables for sure- although there may be some anomalies.
These figures are explained in the latest Renewable Power Generation Costs report, released recently by the International Renewable Energy Agency (IRENA), an intergovernmental organisation with around 160 members, dedicated to the advancement of renewable energy.
IRENA also say that onshore wind costs only $0.03-0.04/kWh in places with a good environment for it, meaning renewable energy is even more attractive for investors in certain areas.
It also highlights the drop of new solar PV projects in countries including Chile, Mexico, Peru, Saudi Arabia and the UAE, which have seen a surge of new energy priced as low as $0.03/kWh – helped by the governments, who have been using fresh, competitive bidding processes when launching contracts to develop new power plants. This proves they weren’t far off when they predicted early last year that renewable energy should be consistently cheaper than traditional fossil fuels by 2020.
Even the most expensive to build renewable energy technology, concentrated solar power (CSP), is still comparable to fossil fuels in various circumstances. The cost of starting a CSP plant can range from $0.10/kWh to about $0.27/kWh, with an average of around $0.18/kWh. This shows the renewable future we’ve dreamt of is actually a possibility!
This closing of the gap in prices is due to the consistently dropping prices of building renewable energy plants. Just last year, the global weighted-average cost of electricity from bioenergy dropped by 14%, while solar PV and onshore wind costs both dropped by 13%, and hydropower by 11%. The most dramatic change was for CSP plants, which dropped by 26%. However, the cost of geothermal and offshore wind only went down by 1%.
IRENA predict that these prices are most likely going to continue dropping over the next 10 years, especially for solar and wind plants. According to the organisation, over three quarters of the onshore wind, and 80% of the solar plants being built next year will be cheaper than its fossil fuel counterparts. “Crucially, they are set to do so without financial assistance,” it added.
Francesco La Camera, director-general of IRENA, has said the low, and improving, cost of renewable energy means it should now be the figurehead of our efforts to improve the planet.
“Renewable power is the backbone of any development that aims to be sustainable”, he said, in a statement issued to announce the publication of the new report. “We must do everything we can to accelerate renewables if we are to meet the climate objectives of the Paris Agreement.”
This should be the turning point for energy around the world.
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