Record Growth Of Renewables In 2023 Drives Cost Advantage And Sets Path To Triple Capacity By 2030 – IRENA

Renewable power continues to outpace fossil fuels in terms of cost and growth, as highlighted in the newly released report, Renewable Power Generation Costs in 2023 by the International Renewable Energy Agency (IRENA). Unveiled at the Global Renewables Summit during the UN General Assembly in New York, the report shows that 81% of new renewable energy projects commissioned in 2023 were cheaper than fossil fuel alternatives. This strong performance provides a powerful business case for countries to triple their renewable energy capacity by 2030.

In 2023, a record 473 gigawatts (GW) of renewable energy capacity was added globally, with 382 GW of utility-scale projects costing less than traditional fossil fuel-fired power plants. After years of technological improvements and decreasing costs, especially for solar and wind, the benefits of renewable energy are clearer than ever. Solar PV, in particular, saw a dramatic drop in costs, with prices falling to around four US cents per kilowatt hour, making it 56% cheaper than fossil fuel and nuclear options. The renewable energy projects deployed since 2000 have saved the global power sector an estimated USD 409 billion in fuel costs.

Francesco La Camera, Director-General of IRENA, emphasized that renewable energy has reached a level of cost-competitiveness that makes it a critical solution for addressing the global energy transition. He noted that long-term support policies have accelerated the growth of renewables, which in turn has driven further technology advancements and cost reductions. He highlighted that the rapid growth of renewables in 2023 is proof of this trend. Low-cost renewable energy sources are now a key incentive for countries to increase their ambitions and aim to triple renewable power capacity by 2030, a target set by IRENA and endorsed by the UAE Consensus at COP28.

To achieve this goal, the global renewable capacity must reach 11.2 terawatts (TW) by 2030, requiring the addition of an average of 1,044 GW annually. Solar PV and onshore wind are expected to contribute 8.5 TW to this capacity, as outlined in IRENA’s World Energy Transitions Outlook. However, reaching the tripling goal will require more than just deploying renewable technologies; key energy transition enablers, such as energy storage, will be crucial. The cost of storage projects has dropped by 89% between 2010 and 2023, making it easier to integrate higher shares of solar and wind energy into the grid while addressing infrastructure challenges.

La Camera also pointed out that the economic opportunities provided by renewable energy growth are immense. Solar PV and onshore wind are expected to have the largest impacts on the tripling of renewable capacity. Low-cost renewables offer policymakers an immediate solution to reduce dependence on fossil fuels, limit the social and economic damage of carbon-intensive energy, drive economic development, and enhance energy security.

In 2023, the global weighted average cost of electricity from newly commissioned renewable projects continued to fall. The cost of solar photovoltaics (PV) dropped by 12%, onshore wind by 3%, offshore wind by 7%, concentrating solar power (CSP) by 4%, and hydropower by 7%. These cost reductions make renewable power the most affordable option for new power generation across many regions, especially in non-OECD economies where electricity demand is rising.

Asia recorded the highest cumulative fuel savings from renewable projects, estimated at USD 212 billion between 2000 and 2010, followed by Europe with USD 88 billion and South America with USD 53 billion. With renewable energy becoming the default source of new power generation, policymakers need to focus on aligning regulations, market structures, financing, and de-risking mechanisms to triple renewable capacity by 2030. These efforts should be reflected in the next round of Nationally Determined Contributions (NDCs) to the Paris Agreement by 2025.