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IRENA: Amid high fossil fuel prices, renewable power saves around $55 billion

The International Renewable Energy Agency (IRENA) has released its report about the cost of renewable power generation in 2021, detailing that renewables are crucial to breaking away from volatile fossil fuel prices and tackling the double whammy of energy security and climate change crises

IRENA: Amid high fossil fuel prices, renewable power saves around $55 billion

Abu-Dhabi, July 14 - Neftegaz.RU. IRENA revealed on July 13 that renewable power remains cost-competitive amid the current fossil fuel crisis and its report indicates that almost 2/3 of renewable power added in 2021 had lower costs than the cheapest coal-fired options in G20 countries.

Furthermore, the organisation outlines that costs for renewables continued to fall in 2021 as supply chain challenges and rising commodity prices have «yet to show their full impact on project costs.»
In line with this, the cost of electricity from onshore wind fell by 15 %, offshore wind by 13 % and solar PV by 13 % compared to 2020.

Moreover, IRENA’s Renewable Power Generation Costs in 2021 report shows that 163 GW of newly installed renewable power in 2021 had lower costs than the world’s cheapest coal-fired option in the G20, estimating that the renewable power added in 2021 saves around $55 billion from global energy generation costs in 2022, given the current high fossil fuel prices.

Francesco La Camera, Director-General of IRENA, remarked:
  • Renewables are by far the cheapest form of power today. 2022 is a stark example of just how economically viable new renewable power generation has become
  • Renewable power frees economies from volatile fossil fuel prices and imports, curbs energy costs and enhances market resilience – even more so if today’s energy crunch continues
In the report, IRENA pointed out that investments in renewables continue to pay huge dividends in 2022, as highlighted by its cost data, which underlines that in non-OECD countries, the 109 GW of renewable energy additions in 2021 that cost less than the cheapest new fossil fuel-fired option will reduce costs by at least $5.7 billion annually for the next 25-30 years.
La Camera added:
  • With the COP27 in Egypt and COP28 in the UAE ahead, renewables provide governments with affordable energy to align with net-zero and turn their climate promises into concrete action with real benefits for people on the ground
This is in line with IRENA’s energy transition outlook from March 2022, which underscored that high fossil fuel prices, energy security concerns, and the urgency of climate change highlight the pressing need to move faster to a clean energy system.

In addition, high coal and fossil gas prices in 2021 and 2022 will also «profoundly deteriorate the competitiveness of fossil fuels and make solar & wind even more attractive.»
As an example, IRENA forecasts that an unprecedented surge in European fossil gas prices will make new fossil gas generation in Europe increasingly uneconomic over its lifetime, increasing the risk of stranded assets.

Based on IRENA’s report, the European example shows that fuel and CO2 costs for existing gas plants might average 4 to 6 times more in 2022 than the lifetime cost of new solar PV and onshore wind commissioned in 2021.
The organisation says that the generation of solar & wind power between January and May 2022 may have saved Europe from fossil fuel imports in the magnitude of no less than $50 billion, predominantly fossil gas.

IRENA’s view about the EU needing more renewable power is also backed by a recent S&P Global Commodity Insights analysis, which stated that Europe will need to ramp up its renewable power generation to meet its green hydrogen goal, which is seen as very important to meeting the goals outlined within REPowerEU.

Author: Melisa Cavcic

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