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Almost two-thirds of new power plants that generate renewable energy have lower costs than the cheapest form of new fossil fuel-based power plants. That’s according to the latest report from the International Renewable Energy Agency (IRENA). As such, the competitiveness of solar and wind energy (and other renewable forms, such as thermal energy) has improved dramatically.

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Infographic from the report © Irena

Renewable energy sources are not only becoming more competitive, but are even cheaper in many cases. Data from Irena’s Renewable Cost Database shows that costs continued to fall in 2020. The cost of electricity from solar photovoltaics fell by 7% year on year, offshore wind by 9%, onshore wind by 13% and concentrated solar power (CSP) by 16%.

Cheapest source of energy

The 2020 figures confirm the trend of the past decade. Between 2010 and 2020, the cost of electricity derived from solar photovoltaics fell by 85%, followed by that from concentrated solar power (68%), onshore wind power (56%) and offshore wind power (48%).

“Renewables are the cheapest source of energy these days,” said director general of Irena Francesco La Camera in a press release. It is also welcome news for developing countries, according to the agency. The renewable energy projects that were added in such countries by the year 2020 will bring down annual costs in the electricity sector by at least US$6 billion. Onshore wind power provides the most cost savings, followed by hydropower and solar power. These cost savings come on top of lower carbon emissions. 

Intergovernmental organization

The report’s authors say the results are overwhelmingly positive, as it shows that low-cost renewable energy sources can form the backbone of a carbon-free electricity system.

IRENA (International Renewable Energy Agency) is an intergovernmental organization dedicated to the promotion of renewable energy. It is headquartered in Abu Dhabi. The German Ministry of Economics and Energy lent its support to the creation of the report.

Also read how solar power plants on a smaller scale can still provide cost-effective power.