RIYADH: The adoption of renewable energy in the new millennium resulted in a substantial reduction of $520 billion in the global electricity sector’s fossil fuel expenses in 2022, according to a recent report released by the International Renewable Energy Agency (IRENA).
Titled “Renewable Power Generation Costs in 2022,” the report highlighted that approximately 86 percent of the newly commissioned renewable capacity in the previous year, equivalent to 187 gigawatts, proved to be more cost-effective than traditional fossil fuel-based electricity.
The report revealed that these cost savings were particularly significant in non-Organization for Economic Co-operation and Development (OECD) nations, where the additional capacity in 2022 was projected to cut costs by up to $22.9 billion annually.
Beyond immediate cost reductions, the report underscored the substantial economic benefits stemming from reduced carbon dioxide emissions and air pollutants. This aspect serves as a buffer against potential fossil fuel price shocks that could otherwise lead to significant economic disruptions.
IRENA Director General Francesco La Camera stated in the report, “IRENA sees 2022 as a turning point in renewable deployment as its cost-competitiveness has never been greater, despite lingering commodity and equipment cost inflation around the world.”
Adoption of Renewable Energy
La Camera emphasized the urgency of accelerating the annual addition of renewable power to 1,000 gigawatts by 2030, a three-fold increase from 2022 levels, to align with climate goals within the 1.5 degrees Celsius warming limit.
Highlighting the need for swift action, La Camera added, “There is no time for a new energy system to evolve gradually, as was the case for fossil fuels. Today’s report shows that with renewables, countries have the best climate solution to raise ambition and take actions in a cost-competitive way, as we prepare for COP28 in Dubai later this year.”
The report also addressed inflation-induced increases in renewable energy costs, pointing out that the weighted average cost of electricity for various types of renewable energy actually decreased globally in 2022.
Costs for utility-scale solar photovoltaic technology decreased by 3 percent, while onshore wind costs dropped by 5 percent. Bioenergy and geothermal witnessed even more substantial reductions, plummeting by 13 and 22 percent, respectively. In contrast, offshore wind and hydropower costs increased due to factors such as reduced Chinese offshore wind deployment and cost overruns in hydropower projects.
The report further highlighted that solar and wind energy have not only achieved cost-competitiveness but have also outperformed fossil fuels over the last decade. The global weighted average cost of electricity generated from solar PV sources plummeted by 89 percent to $0.049 per kilowatt-hour, making it nearly one-third cheaper than the least expensive fossil fuel source. Similarly, onshore wind costs fell by 69 percent to $0.033 per kWh in 2022.
