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Wind and solar projects will be cheaper than coal

Too often, sustainability and the transition toward a renewable energy future get unfairly equated with economic sacrifice and scarcity. But a recent report from the International Renewable Energy Agency (IRENA)—Renewable Power Generation Costs in 2020–-challenges that notion. The report revealed that nearly two-thirds of wind and solar projects built in 2020 will be capable of producing cheaper electricity than even the most economical coal plants.

Is solar cheaper than coal?

The IRENA report indicated that concentrated solar power (CSP) costs fell by 16% last year. But the drop was part of a larger pattern: in just a decade (2010-2020), costs of large-scale solar power have decreased by over 85%. While solar power is not yet universally cheaper than coal, IRENA’s findings indicated a shift in that direction: in the next two years, the report said, three-quarters of all new solar projects will be less costly than new coal plants.

 

The construction costs of new windfarms are falling, and both onshore and offshore wind power costs are on the decline, respectively by 13% and 9%. As with solar power, the notable drop last year was no fluke: onshore wind costs have decreased by approximately 56% and offshore decreased by almost 48% over the last ten years. Over the next two years, too, onshore wind costs will be about 25% lower than even the least expensive new coal plants.

None of these renewable-favoring trends are expected to reverse anytime soon: the report predicted that overall costs of varied renewable energy sources will continue to decrease over the next two years. Director-General of IRENA Francesco La Camera put it plainly: “Today renewables are the cheapest source of power.”

Wind and solar versus coal around the world

Costs and specific energy needs can vary widely, depending on geography and culture. The IRENA report offered a concise breakdown of the bigger picture in different parts of the world. In Europe, for example, a new coal plant would cost significantly more than new wind and solar farms. In India, meanwhile, renewable energy sources would be cheaper than up to 91% of new coal plants. Across emerging economies, new renewable projects added last year are also slated to reduce electricity costs by 6 billion USD (about 5.1 billion euro) annually.

On a global scale, substituting preexisting coal plants with renewable energy sources would result in potential annual savings of up to 32.3 billion USD (about 27.4 billion euro). This same shift could also eliminate about 3 metric tons of carbon dioxide emissions per year.

The future of wind and solar costs

Wind and solar will be cheaper than coal, as well as more viable in other ways, around the world.

Coal power comes with not just an environmental cost but a steep economic one. The IRENA report showed that operating costs of coal plants are higher, making them increasingly more impractical. The agency found that 162 gigawatts (GW), or 62% of new renewable energy initiatives, could undercut the expense of up to 800 GW of coal plants, quashing a staggering amount of would-be carbon emissions. The report noted, for example, that the carbon saved by eliminating 800 GW of coal capacity would equal 20% of the amount required by 2030 if the world is to limit global warming to 1.5 degrees Celsius.

In 2018, this 1.5 degrees Celsius was the “danger figure” indicated in a groundbreaking UN Intergovernmental Panel on Climate Change (IPCC) report looking toward 2030. Climate scientists suggested that even slightly exceeding this temperature could result in heightened risks of drought, floods and other natural and socioeconomic disasters.

The picture of the future painted by the report is optimistic: renewables have taken their place as a key force in the electricity sector. They will also “enable electrification in end-uses like transport, buildings and industry and unlock competitive indirect electrification with renewable hydrogen,” the report clarified.