Replacing the costliest 500 GW of coal with solar photovoltaic (PV) and onshore wind would cut power system costs by up to $23-billion a year and reduce annual carbon dioxide (CO2) emissions by around 1.8 gigatons, equivalent to 5% of total global CO2 emissions in 2019, a new report shows.
The study also shows that up to 1 200 GW of existing coal capacity could cost more to operate next year than the cost of new utility-scale solar PV.
Titled ‘Renewable Power Generation Costs in 2019’ and published by the International Renewable Energy Agency (Irena) the report states that more than half of the renewables capacity added last year achieved lower power costs than the cheapest new coal plants and that new wind and solar PV generators are also undercutting the costs of existing coal-fired plants.
“We have reached an important turning point in the energy transition. The case for new and much of the existing coal power generation, is both environmentally and economically unjustifiable,” Irena director-general Francesco La Camera said in a statement accompanying the release of the report.
On average, new solar PV and onshore wind power now costs less than keeping many existing coal plants in operation – a trend that will accelerate, in line with recent auction results.
Record-low auction prices for solar PV procured in the United Arab Emirates, Chile, Ethiopia, Mexico, Peru and Saudi Arabia last year confirmed that prices of $0.03/kWh were feasible.
Irena is forecasting that average solar PV prices will be $0.039/kWh for projects commissioned in 2021, 42% below the 2019 average of $0.068/kWh and more than one-fifth less than coal-fired plants.
Onshore and offshore wind both declined about 9% last year, reaching $0.053/kWh and $0.115/kWh respectively.
Since 2010, utility-scale solar PV power costs have declined by 82%, followed by concentrating solar power at 47%, onshore wind at 39% and offshore wind at 29%.
These sharp declines mean that more new capacity is being derived from each dollar invested in renewables, with the report showing that, in 2019, twice as much renewable power generation capacity was commissioned than in 2010 but with only 18% more investment.
Replacing the costliest 500 GW of coal with solar PV and onshore wind would also yield an investment stimulus of $940-billion, or about 1% of global gross domestic product.
“Renewable energy is increasingly the cheapest source of new electricity, offering tremendous potential to stimulate the global economy and get people back to work,” La Camera said, arguing for the global post-Covid-19 recovery strategy to be a green strategy.
“Renewables offer a way to align short-term policy action with medium- and long-term energy and climate goals. Renewables must be the backbone of national efforts to restart economies in the wake of the Covid-19 outbreak. With the right policies in place, falling renewable power costs, can shift markets and contribute greatly towards a green recovery,” he added.
Irena’s green-stimulus message is in line with a similar call made in May by the International Energy Agency (IEA), which urged governments to include renewables investment strategies in their postpandemic stimulus packages.
IEA executive director Dr Fatih Birol warned, however, that clean-energy investment would need to more than double from current levels of around $600-billion a year to meet global climate targets.
Birol also expressed concern over the rise in global approvals, led by China, for new coal plants in the first quarter of 2020, which were made at twice the rate of 2019.
Taking anticipated retirements into account, these projects, which would enter production between 2020 and 2023, would lead to a net growth in the global coal fleet of around 40 GW. This, despite rising environmental-permitting and funding pressures and the fact that many coal plants were being operated well below nameplate levels globally, or being retired early.
“There is a great risk that the lockdown that the world has experienced may lead to a lock-in of obsolete energy technologies, which could determine energy patterns for years to come,” Birol cautioned during a recent webinar.