Intergovernmental organisation the International Renewable Energy Agency (Irena) has confirmed in a new report that the 187 GW of renewable energy installed last year contributed to the global power sector saving fuel costs of $520-billion.

The organisation says the fossil fuel price crisis has accelerated the competitiveness of renewable energy, with 86% of all the newly commissioned renewable capacity in 2022 having had lower costs than fossil-fuel electricity.

New renewable capacity added since 2000 reduced the electricity sector fuel bill in 2022 by at least $520-billion, Irena elaborates, adding that in non-Organisation for Economic Cooperation and Development countries, just the saving over the lifetime of new capacity additions in 2022 will reduce costs by up to $580-billion.

In addition to these direct cost savings, there have been substantial economic benefits from reducing carbon dioxide emissions and local air pollutants. Irena believes the fossil fuel price shock experienced globally in 2022 would have been much worse had renewable energy not been deployed over the last two decades.

The report, titled ‘Renewable Power Generation Costs in 2022’, reiterates Irena’s position that cost-competitive renewables play a significant role in addressing energy and climate crises, particularly as the world works to limit global warming to below 1.5 ºC.

Irena considers 2022 as a veritable turning point in the deployment of renewables as its cost-competitiveness has never been greater, despite the lingering commodity and equipment cost inflation around the world.

The most affected regions by the historic price shock were remarkably resilient, in large part owing to the massive increase of solar and wind in the last decade, Irena director-general Francesco La Camera explains.

He adds, however, that the world must add 1 000 GW of renewable power every year until 2030 to keep within the 1.5 ºC scenario’s reach, which is more than three times the 2022 installation levels.

“Today, the business case for renewables is compelling. There is no time for a new energy system to evolve gradually as was the case for fossil fuels. In preparation for the COP28 in Dubai later this year, today’s report shows once again that with renewables, countries have the best climate solution at hand to raise ambition and take actions in a cost- competitive way.”

La Camera notes that the weighted average cost of electricity for utility-scale solar photovoltaic (PV) fell by 3% in 2022, while this figure increases to 5% for onshore wind. Concentrated solar power (CSP) fell by 2%, bioenergy by 13% and geothermal power by 22% last year.

Only the costs for offshore wind and hydropower recorded incresases of 2% and 18% respectively in 2022, owing to the reduced share of China in offshore wind deployments in 2022 and cost overruns in a number of large hydropower projects.

Looking at the global weighted average costs of electricity over 2010 and 2022, solar PV decreased by 89%, onshore wind by 69%, CSP by 69% and offshore wind by 59%.

For the last 13 to 15 years, renewable power generation costs from solar and wind power have been falling. Between 2010 and 2022, solar and wind power became cost- competitive with fossil fuels even without financial support.

The global weighted average cost of electricity from solar PV falling by 89% resulted in a price of $0.049/kWh last year, which is almost one-third less than the cheapest fossil fuel globally.

The 69% price fall in the global weighted average cost of electricity from onshore wind resulted in a cost of $0.033/kWh in 2022, slightly less than half that of the cheapest fossil fuel-fired option.

Irena concludes in the report that expected high fossil fuel prices will cement the structural shift that has seen renewable power generation become the least-cost source of new generation, even undercutting existing fossil fuel generators.

“Renewables can protect consumers from fossil fuel price shocks, avoid physical supply shortages and enhance energy security,” La Camera states.