Tumbling Renewable Energy Costs Add To Arguments For Countries To Ditch Coal Power

The cost of renewable energy continues to fall below that of conventional sources of power such as coal, according to the latest global estimates – providing further arguments for green energy adherents to push governments to retire coal-fired power plants sooner.

According to the Abu Dhabi-based International Renewable Energy Agency (IRENA), the cost of concentrating solar power (CSP) fell by 16% last year, with onshore wind costs dropping by 13%, offshore wind by 9% and solar photovoltaic (PV) by 7%.

Solar PV and onshore wind power are now consistently cheaper than fossil fuel-powered plants, while offshore wind and CSP plants are generally able to compete head-to-head against conventional sources.

This continues a trend that has seen renewable energy costs fall sharply over the past decade. From 2010 to 2020, the cost of utility-scale solar PV fell by 85%, according to IRENA’s estimates. The cost of other green energy sources including CSP, onshore and offshore wind fell by between 48% and 68% over the same period.

Is coal power now uneconomic?

The tumbling cost of renewable energy means that conventional plants are starting to look increasingly expensive. In Germany, no existing coal plant has lower operating costs than new solar PV or onshore wind capacity. In India, 141 GW of installed coal power plant capacity is more expensive than new renewable capacity.

The picture is similar in the U.S., where 61% of total coal-fired electricity generating capacity costs more than new renewable power plants would – accounting for some 149 GW of power. According to IRENA, if those coal plants were replaced with renewable alternatives, the U.S. would save $5.6 billion a year and cut 332 million tonnes of CO₂ emissions.

It is in the nature of the power industry that newer plants will cost less to operate than older ones, but such considerations take on added resonance ahead of the COP26 climate change summit in the U.K. in November – the latest stage in global efforts to reduce net carbon emissions to zero by 2050 and prevent temperatures rising by more than 2 degrees Celsius.

On a global scale, replacing more expensive coal plants with solar or onshore wind power could save more than $32 billion a year and reduce CO₂ emissions by 3 giga tonnes – equivalent to 9% of global energy-related CO₂ emissions in 2020.

“We are far beyond the tipping point of coal,” said IRENA director-general Francesco La Camera. “Renewables present countries tied to coal with an economically attractive phase-out agenda that ensures they meet growing energy demand, while saving costs, adding jobs, boosting growth and meeting climate ambition.”

These trends are expected to continue into the future, with IRENA predicting renewable power costs will continue to fall this year and next year. It points to recent record low auction prices for solar PV power in countries ranging from Ethiopia to Chile, Mexico, Peru, Saudi Arabia and the UAE.