July 14 (Renewables Now) - Renewables continued to become more competitive in 2021, with the cost of electricity from onshore wind and solar photovoltaic (PV) falling by 15% and 13%, respectively, compared to 2020, according to a report by the International Renewable Energy Agency (IRENA), unveiled on Wednesday.

The Renewable Power Generation Costs in 2021 report estimates that the global weighted average levelised cost of electricity (LCOE) of new onshore wind added in 2021 declined to USD 0.033 ( EUR 0.033) per kWh and of new utility-scale solar PV was down to USD 0.048 per kWh. The cost decline for new onshore wind excluding China was somewhat smaller, by 12% year-on-year to USD 0.037 per kWh.

The offshore wind market, which experienced a record 21 GW of installations in 2021 driven by China, saw its global weighted average cost of electricity drop 13% year-on-year to USD 0.075 per kWh.

According to IRENA, nearly two-thirds, or 163 GW of newly added renewables in 2021, had lower costs than the cheapest coal-fired option in the G20.

The agency calculates that, against the backdrop of the current expensive fossil fuels, the renewable power added in 2021 will save at least USD 55 billion from global energy generation costs in 2022.

In Europe, solar and wind generation avoided at least USD 50 billion in fossil fuel imports in the January-May 2022 period.

“Renewables are by far the cheapest form of power today,” said IRENA director-general Francesco La Camera. “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,” he added.

Ahead of the COP27 in Egypt and COP28 in the UAE ahead, La Camera called on governments to take advantage of the affordable renewable energy to align with net zero and turn their climate promises into concrete action.

Installed costs are expected to increase this year in more markets as supply chain challenges and rising commodity costs get passed into equipment prices. The report, however, says that “with the extremely high fossil fuel prices already experienced in 2022 likely to continue, the additional cost is outweighed many times over by the economic benefit of new renewable capacity.”

(USD 1 = EUR 0.993)

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