The costs of renewable energy fell to a record low in 2018, according to a new report from the International Renewable Energy Agency (IRENA). Renewable sources are already the cheapest way to generate electricity in many parts of the world, the intergovernmental agency reports, and they're rapidly outpacing the affordability of fossil fuels on a global scale.
Within the next year, electricity generated by onshore wind and solar photovoltaic (PV) technologies will be consistently cheaper than electricity generated by any fossil-fuel source, the report forecasts. On top of the "hidden" costs of fossil fuels — from dangerous mining and drilling operations to the greenhouse gas emissions that are now disrupting climate patterns all over the planet — this is further boosting the economic case for a global shift to renewable energy.
"Renewable power is the backbone of any development that aims to be sustainable," IRENA Director-General Francesco La Camera says in a statement released May 29. "We must do everything we can to accelerate renewables if we are to meet the climate objectives of the Paris Agreement. Today's report sends a clear signal to the international community: Renewable energy provides countries with a low-cost climate solution that allows for scaling up action."
The biggest cost reduction in 2018 was for concentrated solar power (CSP), which saw a 26% drop in its global weighted-average cost of electricity generation, according to IRENA. This was followed by a 14% drop for bioenergy costs, 13% for solar PV and onshore wind, 11% for hydroelectricity, and 1% for geothermal and offshore wind. These reductions are being driven by technological improvements as well as increased production, Reuters reports.
Hydroelectricity remains the cheapest form of renewable power overall, at a global weighted-average cost of just under $0.05 per kilowatt hour (kWh), but several other sources are now commonly below $0.10 per kWh, according to IRENA. That includes onshore wind, at a little more than $0.05 per kWh, and solar PV, which averages less than $0.90 per kWh globally. Even CSP, the most expensive renewable source, increasingly rivals fossil fuels at about $0.19 per kWh. (For comparison, developing a new power plant based on fossil fuels like oil or gas tends to range from $0.05 to $0.15 per kWh, according to Forbes.)
These are global averages, so the costs are still higher in some countries. But they're also even lower in others — solar PV, for example, has recently fallen as low as $0.03 per kWh in Chile, Mexico, Peru, Saudi Arabia and the United Arab Emirates.
This trend shows no signs of slowing down, IRENA adds. Costs of renewable energy are expected to continue falling into the next decade, especially for solar- and wind-power technologies. More than 75% of onshore wind and 80% of solar PV projects due to be commissioned next year will generate power at lower prices than the cheapest new fossil-fuel options, according to the report. On top of that, IRENA points out, they're on pace to achieve this milestone even without financial assistance.