The cost of solar and wind power has fallen steeply in recent years. On a broader scale, the International Renewable Energy Agency, or IRENA, indicates that the installation cost of green energy is, on the whole, declining year over year, with land-based wind power expected to reach US$0.043/kWh and solar power reaching $0.039/kWh in 2021. These rates are 18% and 42% lower than 2019 figures, respectively.
In other words, solar and wind power plants are much cheaper to build compared to coal-fired power plants. What’s more, the operating cost it takes to maintain the world’s coals-fired power plants, with a total capacity of 1,200 GW, is projected to exceed that of equivalent capacity solar power plants in 2021. On the other hand, replacing the world’s 500 GW coal-fired plants, which are the most expensive type of plants to operate, with solar power plant will reduce carbon dioxide emissions by about 1.8 GW, or about 5% of total carbon emissions in 2019.
Many regions have done away with coal-fired energy as solar and wind power sees increasing installation capacities. Case in point, the UK has gone a full 54 days, or 774 hours, without coal-fired energy since June, at the time of writing. Granted, a series of happy coincidences led to this development as well: the UK had an unusually sunny spring this year, along with decreased electricity demand owing to the COVID-19 pandemic.
IRENA attributes the decreasing cost of green energy to the maturity of the technologies and the economies of scale employed by utility companies. Research shows that since 2010, the costs of solar energy, concentrated solar power, land-based wind energy, and offshore wind energy have gone down by as much as 82%, 47%, 39%, and 29%, respectively. According to IRENA, this downtrend is expected to persist, as suggested by results from utility provider auctions, bringing the world closer to a future without coal-fired energy.
This downtrend of renewable energy prices can be found in several recent auctions. For instance, the Al Dhafra solar plant in the UAE set a record low in energy rate, at $0.0135/kWh, owing to the region’s abundant sunlight and flexible investment climate. According to Robin Mills, founder and CEO of Dubai-based Qamar Energy, the Middle East historically relied on electricity generated from sources such as natural gas and petroleum, but solar power has now emerged as a viable alternative to meeting the demands of the Middle East’s ever-increasing energy consumption.
Naturally, IRENA has high hopes for the future of renewable energy. “Renewables must be the backbone of national efforts to restart economies in the wake of the COVID-19 outbreak,” says Francesco La Camera, the agency’s director-general. “We have reached an important turning point in the energy transition.” The International Energy Agency, however, thinks otherwise. IEA believes that both solar and wind power industries will decline for the first time in history this year due to standstills in manufacturing operations and subsequent delays in renewable energy installations.
But what’s certain is that renewable energy has become cheaper and cheaper. IRENA indicates that by 2030, both solar energy and wind energy will cost less than conventional electricity generation.