Renewable power is increasingly cheaper than any new electricity capacity based on fossil
fuels, said in a new report by the International Renewable Energy Agency (IRENA)
published in June. “Renewable Power Generation Costs in 2019” shows that more than half
of the renewable capacity added in 2019 achieved lower power costs than the cheapest new
coal plants.

The report highlights that new renewable power generation projects now increasingly
undercut existing coal-fired plants. On average, new solar photovoltaic (PV) and onshore
wind power cost less than keeping many existing coal plants in operation, and auction results
show this trend accelerating – reinforcing the case to phase-out coal entirely. Next year, up to
1 200 gigawatts (GW) of existing coal capacity could cost more to operate than the cost of
new utility-scale solar PV, the report shows.

Replacing the costliest 500 GW of coal with solar PV and onshore wind next year would cut
power system costs by up to USD 23 billion every year and reduce annual emissions by
around 1.8 gigatons (Gt) of carbon dioxide (CO2), equivalent to 5% of total global CO2
emissions in 2019. It would also yield an investment stimulus of USD 940 billion, which is
equal to around 1% of global GDP.

Renewable electricity costs have fallen sharply over the past decade, driven by improving
technologies, economies of scale, increasingly competitive supply chains and growing
developer experience. Since 2010, utility-scale solar PV power has shown the sharpest cost
decline at 82%, followed by concentrating solar power (CSP) at 47%, onshore wind at 39%
and offshore wind at 29%.

Costs for solar and wind power technologies also continued to fall year-on-year. Electricity
costs from utility-scale solar PV fell 13% in 2019, reaching a global average of 6.8 cents
(USD 0.068) per kilowatt-hour (kWh). Onshore and offshore wind both declined about 9%,
reaching USD 0.053/kWh and USD 0.115/kWh, respectively.

Recent auctions and power purchase agreements (PPAs) show the downward trend
continuing for new projects are commissioned in 2020 and beyond. Solar PV prices based on
competitive procurement could average USD 0.039/kWh for projects commissioned in 2021,
down 42% compared to 2019 and more than one-fifth less than the cheapest fossil-fuel
competitor namely coal-fired plants. Record-low auction prices for solar PV in Abu Dhabi
and Dubai (UAE), Chile, Ethiopia, Mexico, Peru and Saudi Arabia confirm that values as low
as USD 0.03/kWh are already possible.

For the first time, IRENA’s annual report also looks at investment value in relation to falling
generation costs. The same amount of money invested in renewable power today produces
more new capacity than it would have a decade ago. In 2019, twice as much renewable power generation capacity was commissioned than in 2010 but required only 18% more investment.

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