The cost of generating renewable power is falling at an "unprecedented" rate, and by 2020, all renewable technologies will be price competitive with traditional fossil fuels, a new report says.
Since 2010, the cost of generating power from onshore wind has fallen by around a quarter, while solar photovoltaic (PV) electricity costs have dropped by 73 per cent, according to a report published today by the International Renewable Energy Agency (Irena).
Within just two years years, Irena expects solar energy generation costs to halve, and it said the best onshore wind and solar PV projects could be delivering electricity for an equivalent of 3 cents (2 pence) per kilowatt hour (kWh), or less.
The report said the current cost spectrum for fossil fuel power generation ranges from 5 to 17 cents per kWh. In comparison, all current commercial forms of green energy are expected to generate in the range of 3 to 10 cents per kWh by 2020.
“Turning to renewables for new power generation is not simply an environmentally conscious decision, it is now – overwhelmingly – a smart economic one,” said Adnan Amin, Irena's director general.
“Governments around the world are recognising this potential and forging ahead with low-carbon economic agendas underpinned by renewables-based energy systems. We expect the transition to gather further momentum, supporting jobs, growth, improved health, national resilience and climate mitigation around the world in 2018 and beyond.”
Prices have dropped due to more competitive bidding processes for contracts, an emerging base of developers joining competitions for global market opportunities and continuous advancements in technology.
“This new dynamic signals a significant shift in the energy paradigm,” Amin said.
“These cost declines across technologies are unprecedented and representative of the degree to which renewable energy is disrupting the global energy system."