Renewables outperform fossil fuels on cost for power generation

A report by the International Renewable Energy Agency (IRENA) on Tuesday, 22 July, showed how renewables are more cost effective than fossil fuels for electricity generating.

Why this is important?

A target was set at the COP28 UN Climate Conference in 2023 to triple the amount of renewables, such as wind and solar, to keep within a 1.5°C (2.7°F) warming limit this century.

By the numbers 

Last year, 582 gigawatts of new renewable energy capacity, such as hydropower, solar, wind and geothermal, was added globally. This was nearly 20% higher than in 2023. The report stated that around 91% of the utility-scale projects commissioned were more cost effective than fossil fuel alternatives.

Solar photovoltaic (PV) was 41% cheaper on average than the lowest-cost fossil fuel alternatives, such as gas, while onshore wind projects were 53% cheaper.

The report added that the cost of battery energy storage systems has declined by 93% since 2010.

Context

The costs of renewable technologies have been decreasing since 2010 due to technological advances and economies of scale.

Director general of IRENA, Francesco La Camera, said:

“Looking at all renewables currently in operation, the avoided fossil fuel costs in 2024 reached up to $467 billion. New renewable power out competes fossil fuels on cost, offering a clear path to affordable, secure, and sustainable energy.

“However, this progress is not guaranteed. Rising geopolitical tensions, trade tariffs, and material supply constraints threaten to slow the momentum and drive-up costs.”