Falling renewables costs undercut new and some existing coal plants – study

The cost of renewable energy sources is undercutting that of new and some existing coal-fired power plants, a report by the International Renewable Energy Agency (IRENA) showed on Tuesday.

Due to cheaper renewable energy, up to 800 gigawatts (GW) of existing coal-fired capacity could be replaced by new renewables capacity, which would save up to $32 billion a year and reduce carbon dioxide emissions by up to 3 gigatonnes.

“As costs for solar photovoltaic (PV) and onshore wind have fallen, new renewable capacity is not only increasingly cheaper than new fossil fuel-fired capacity, but increasingly undercuts the operating costs alone of existing coal-fired power plants,” IRENA said in its annual renewable power generation costs report.

Phasing out coal burning is seen as key to meeting a Paris Agreement commitment to curb the global average temperature rise to below 2 degrees Celsius this century. The IEA forecast global coal demand would fall by about 8 per cent in 2020.

Last year the global weighted-average levelised cost of electricity (LCOE) from new capacity additions of onshore wind fell by 13 per cent compared to 2019, while the LCOE of offshore wind dropped by 9 per cent and utility-scale solar PV by 7 per cent, the report showed.

The LCOE comprises the cost of generating a megawatt hour of electricity, plus the upfront capital and development cost, financing costs, and operating and maintenance fees.