In the Face of Energy Price Spike, Majority of New Renewable Electricity Proved More Affordable Than Fossil Fuels in 2020
The year 2020 witnessed a significant spike in energy prices, driven by various factors such as geopolitical tensions, supply disruptions, and increased demand. As traditional fossil fuel sources struggled to meet the rising energy needs, renewable electricity emerged as a cost-effective and sustainable alternative. Surprisingly, the majority of new renewable electricity generated in 2020 proved to be more affordable than fossil fuels, marking a significant milestone in the global energy transition.
Renewable energy technologies, including solar, wind, hydro, and geothermal power, have been rapidly advancing over the past decade. This progress has led to substantial cost reductions, making renewable electricity increasingly competitive with conventional fossil fuel-based power generation. In 2020, this trend reached a tipping point, with renewables surpassing fossil fuels in terms of affordability for new electricity projects.
According to a report published by the International Renewable Energy Agency (IRENA), 162 gigawatts (GW) of new renewable electricity capacity was added globally in 2020. Remarkably, 62% of this capacity was installed at a lower cost than the cheapest fossil fuel option. This demonstrates that renewable energy is not only environmentally friendly but also economically viable.
Solar photovoltaic (PV) technology played a significant role in driving down the cost of renewable electricity. The cost of solar PV modules has plummeted by around 90% over the past decade, making it one of the most affordable sources of energy. In many regions, solar PV projects now offer electricity at a lower price than coal or gas-fired power plants. This cost advantage has attracted substantial investments in solar energy, leading to its rapid deployment worldwide.
Wind power also contributed to the affordability of renewable electricity in 2020. Onshore wind projects have become increasingly cost-competitive, with the levelized cost of electricity (LCOE) dropping significantly. Offshore wind, although still relatively more expensive, has also witnessed a decline in costs due to technological advancements and economies of scale. As a result, wind power has become a key player in the global energy mix, providing affordable and clean electricity.
Hydropower, the oldest and most established renewable energy source, continued to offer cost-effective electricity generation in 2020. Large-scale hydropower projects have long been recognized for their low operating costs and long lifespan. However, small-scale hydropower installations, such as run-of-river and micro-hydro systems, have gained popularity due to their lower environmental impact and affordability.
Geothermal energy, although less prevalent than solar or wind power, also demonstrated its cost competitiveness in 2020. Geothermal power plants utilize the Earth’s natural heat to generate electricity, offering a reliable and sustainable energy source. As technology improves and more geothermal resources are tapped into, the cost of geothermal electricity is expected to further decrease, making it an attractive option for many countries.
The affordability of renewable electricity compared to fossil fuels in 2020 has significant implications for the global energy transition. It highlights the economic viability of renewable energy sources and provides a strong incentive for governments and investors to accelerate the shift away from fossil fuels. As renewable technologies continue to advance and scale up, it is expected that their cost advantage will further increase, making them the preferred choice for future electricity generation.
In conclusion, the majority of new renewable electricity generated in 2020 proved to be more affordable than fossil fuels. This milestone signifies a turning point in the global energy landscape, demonstrating that renewable energy is not only environmentally friendly but also economically viable. The cost reductions in solar, wind, hydro, and geothermal power have made them increasingly competitive with conventional fossil fuel-based power generation. As we move forward, it is crucial to continue investing in and supporting renewable energy to ensure a sustainable and affordable energy future.
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- Source: Plato Data Intelligence.