Can the world afford the transition to renewable energy? That’s been a nagging concern for years. The cost of renewable energy has consistently been used to delay action on climate change. There may have been an argument ten years ago, but anyone making the case today is not paying attention.
This graph is from the latest report out of the International Renewable Energy Agency, and it shows the falling costs of various kinds of clean power – exactly what you’d expect to see as the sector achieves new economies of scale.
The trend is indicated for each type of power, with the difference betwen average global prices in 2010 and 2019.
As you can see, solar has the most dramatic fall in price – an 82% decline in cost. To put that another way, if you invested a million dollars in solar power in 2010, it would have bought you 213 kilowatts of capacity. The same money invested today would pay for 1,005kw.
The important question is of course the price relative to fossil fuels. To make the transition, renewable energy has to replace fossil fuels, and for that it needs to be competitive on price. The graph helpfully has the price range of fossil fuels in a dark grey bar across the bottom.
From this we can see that in 2010, solar PV was always more expensive that fossil fuels, sometimes twice the price. Today almost all PV projects are cheaper. All onshore wind power is competitive with fossil fuels, and the best schemes are cheaper.
Concentrating solar power is still more expensive, but might not be for long if that trend line continues. Costs for geothermal and hydro buck the trend and are rising, but were already highly competitive against fossil fuels.
Yes, there are additional costs around renewable energy that aren’t captured here – such as the need for grid balancing and energy storage. But there are additional costs to fossil fuels too, the most important one being the destruction of a habitable planet.