Among Electricity Costs, 86% of New Renewable Electricity was cheaper than Fossil Fuels last year.

Among Electricity Costs, 86% of New Renewable Electricity was cheaper than Fossil Fuels last year.

Renewable energy has been rapidly replacing fossil fuels as the most expensive source of electricity. Due to the increase in fuel prices last year, it is now the winner when it comes to saving money.

For decades, solar and wind power were more expensive than fossil fuels and many projects were heavily dependent on government subsidies to survive. But rapidly falling costs mean that renewables are now matching or even surpassing traditional energy sources in a wide range of markets.

That change is now accelerating, according to a new report from the International Renewable Energy Agency (IRENA). Thanks in large part to a huge spike in fossil fuel prices, 86 percent of grid-scale renewable electricity capacity by 2022 is cheaper than fossil-based electricity. This is despite the fact that all kinds of costs have increased all over the world due to rising prices and disruptions in supply chains caused by the Covid epidemic and the war in Ukraine.

“IRENA sees 2022 as the turning point for the export of renewables as cost competitiveness has never been greater without the increase in the price of goods and equipment worldwide,” IRENA director-general Francesco La Camera said in a press release.

The findings are the latest data points to a dramatic drop in renewal rates that have occurred in recent years. According to the report, in 2010 solar energy was 710 percent more expensive than the cheapest fossil fuels, while offshore wind was 95 percent more expensive.

Last year, the average cost of electricity from solar fell 3 percent to nearly a third less than the cheapest fossil fuel worldwide, while the cost of offshore wind fell 5 percent to slightly less than half the most expensive fossil fuel option.

Cost reductions were not evenly distributed however, notes the report. Significant improvements in solar and offshore wind are both driven by deployment in China. If the Asian giant were excluded from the calculation, the average price of onshore wind would remain low. And countries like France, Germany, and Greece have experienced huge increases in solar costs.

Costs for offshore wind and hydroelectric projects are also both set to increase in 2022. The former saw a 2 percent increase due to a slowdown in Chinese deployments, while the latter saw costs jump 18 percent due to a glut in the number of major projects.

However, the report found the combined renewable energy deployed worldwide since the year 2000 saved about $521 billion in fuel costs by 2022. from developing into an energy crisis last year, it highlights the security benefits of renewable energy.

“The regions most affected by historical shocks have been remarkably resilient, largely because of the massive increase in solar and wind power over the past decade,” La Camera said.

Even in areas where the cost of renewables has risen, the report says gasoline prices tend to rise more. With prices expected to remain high, the authors conclude that this will halt structural changes in the energy market with renewables becoming the cheapest source of energy worldwide.

Whether these cost-shifting changes will be enough to stave off the climate crisis remains to be seen. La Camera notes that the annual export of renewable energy must hit 1,000 gigawatts every year until 2030 if we want to keep alive the goal of reducing global warming to 1.5 degrees Celsius. That’s an ambitious goal that will need all the help it can get from the business community.

Image Credit: Chelsea / Unsplash

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