Are Renewables as Cost Effective As Fossil Fuels?
February 2, 2015
A new report by IRENA (International Renewable Energy Agency) this month asserts renewable energy generation is now cost-competitive with fossil fuels, despite falling oil prices.
In a press release the organization reported that in many parts of the world, it is now even cheaper to generate electricity from renewable sources than it is to use oil, gas or coal. The growth in solar photovoltaic development has lead the way, as costs have fallen 75% below what they averaged in 2009.
“Now is the time for a step-change in deployment for renewables,” said Adnad Amin, IRENA’s Director-General. “It has never been cheaper to avoid dangerous climate change, create jobs, reduce fuel import bills and future-proof our energy system with renewables. This requires public acknowledgement of the low price of renewables, an end to subsidies for fossil fuels, and regulations and infrastructure to support the global energy transition.”
Other significant findings in the report include the following:
- In Europe, individual wind projects are valued currently at an average of $.05 USD per kilowatt hour, compared a range of $.045-.14 for fossil fuels.
- Both individual and utility scale solar power fell by at least 65% since 2008 around the world. Solar development has become particularly cost competitive in China, and both North and South America.
- Renewables are cost effective even when accounting for adding them to the infrastructure electricity grid, especially when taking into account the potential health effects and related costs caused by fossil-fueled power generation.
Currently, renewables make up 22 percent of the world’s electricity generation, a number which will need to increase significantly if countries such as India are going to develop further in a sustainable fashion. However, it will be a difficult task, as the growing global population combined with their growing energy consumption needs means that renewable energy infrastructure not only needs to grow each year, but needs to outpace the rate of energy consumption growth as well. So far, in countries such China and even the US, efforts at adding renewable energy have not caught up with the rate of consumption. It is also important to remember that this report only values electricity generation, and not energy consumption overall; changing transportation energy over to renewables is going to be an extremely difficult challenge as well.
The IRENA report also warns that their findings are a global average, and that the cost of renewables is not universally competitive in all parts of the globe. Resources and the availability of financing are largely responsible for how easily a nation can implement energy changes. Also, political will is another factor which has to be taken into account. That said, it is encouraging that there is an increasingly economic argument in favor of adapting and implement renewable technology on a large, utility-scale.
Aaron Dorman, Intern