Record Growth Drives Cost Advantage of Renewable Power

81% of renewable additions in 2023 were cheaper than fossil fuel alternatives, offering countries a compelling business and investment case to triple renewables by 2030

Abu Dhabi, United Arab Emirates / New York, United States of America, 24 September 2024 - Renewables remain competitive despite fossil fuel prices returning closer to historical cost levels, concludes Renewable Power Generation Costs in 2023, released by the International Renewable Energy Agency (IRENA) at the Global Renewables Summit during the UN General Assembly in New York today.

Of the record 473 gigawatts (GW) added in 2023, 81% or 382 GW of newly commissioned, utility-scale renewable projects had lower costs than their fossil fuel-fired alternatives. IRENA's new report shows that after decades of falling costs and improving technology particularly for solar and wind, the socio-economic and environmental benefits of renewable energy deployment are now uniquely compelling.

With a spectacular decline in costs to around four US cents per kilowatt hour in just one year, solar PV's global costs in 2023 were 56% lower than fossil fuel and nuclear options. Overall, the renewable power deployed globally since 2000 has saved up to USD 409 billion in fuel costs in the power sector.

IRENA's Director-General Francesco La Camera said: "Renewable power remains cost-competitive vis-à-vis fossil fuels. The virtuous cycle of long-term support policies has accelerated renewables. In return, growth has led to technology improvements and cost reductions. Prices for renewables are no excuse anymore, on the contrary. The record growth of renewables in 2023 exemplifies this. Low-cost renewables represent a key incentive to significantly increase ambition and triple renewable power capacity by 2030, as modelled by IRENA and set by the UAE Consensus at COP28".

Achieving the tripling renewables target requires global renewable capacity to reach 11.2 TW by 2030, adding an average of 1044 GW of new capacity annually through 2030. 8.5 TW would come from solar PV and onshore wind alone according to IRENA's World Energy Transitions Outlook.

Most importantly, the tripling goal must be accompanied by key energy transition enablers, such as storage. Storage project costs have dropped by 89% between 2010 and 2023, facilitating the integration of high shares of solar and wind capacity by helping address grid infrastructure challenges.

La Camera added: "In the coming years, remarkable growth across all renewable energy sources is expected, giving countries great economic opportunities. Our analysis indicates that solar PV and onshore wind will have the biggest impacts on the tripling of renewables. Thanks to low-cost renewables in the global market, policy makers have an immediate solution at hand to reduce fossil fuels dependency, limit the economic and social damage of carbon-intensive energy use, drive economic development and harness energy security benefits."

In 2023, the global weighted average cost of electricity from newly commissioned renewable projects across most technologies fell, for solar photovoltaics (PV) by 12%, for onshore wind by 3%, for offshore wind by 7%, for concentrating solar power (CSP) by 4% and for hydropower by 7%.

In non-OECD economies where electricity demand is growing and new capacity is needed, renewable power generation projects with lower costs than fossil fuel-fired equivalents for their country and region will significantly reduce electricity system costs over the life of their operation.

In 2023, Asia registered the highest cumulative savings in the period between 2000-2010, estimated at USD 212 billion, followed by Europe with USD 88 billion and South America with an estimated USD 53 billion.

Renewable power generation has become the default source of least-cost new power generation. Policy makers and stakeholders should focus on ensuring that policies, regulations, market structures, support instruments, de-risking mechanisms, and financing are all rapidly aligned with the tripling target and submitted in the next round of Nationally Determined Contributions (NDCs) to the Paris Agreement in 2025. Read the full report Renewable Power Generation Costs in 2023.

More information and cost analysis infographics.

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