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Back You are here: Home Politics Renewables can be cost competitive with fossil fuels - Irena


Renewables can be cost competitive with fossil fuels - Irena

Renewables can be cost competitive with fossil fuels - Irena
Solar energy has now become cheaper than diesel generation in various situations

Dramatic decline in costs allows renewable energy to become more and more competitive with fossil fuels worldwide, according to a recent study by the International Renewable Energy Agency.

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The report, released during the World Future Energy Summit in Abu Dhabi, projected that costs of various types of renewables will continue to fall rapidly over the coming years.

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Specifically, technologies with the largest cost reduction potential are solar photovoltaics, concentrated solar power and wind. Hydropower and most biomass combustion technologies, on the other hand, are mature and their cost reduction potentials are not that big.

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Solar PV has made remarkable progress in reducing costs to date. It has been established as a secure energy source with very high plant reliability and is not exposed to any fuel price volatility, achieving grid parity in a number of markets.

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“With continued cost reductions, grid parity will soon be the norm, rather than the exception,” stated the report.

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As for the wind energy, the report found that total installed costs are declining again after seen an increase between 2004 and 2009.

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Wind turbine costs, determined by a global overcapacity at wind turbine manufacturers, are declining as well and have fallen by around a quarter from their 2009 peak in the United States. Moreover, the current large discrepancies between Chinese turbine prices and those in the U.S. in 2012 suggest further drop in prices.

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Despite significant cost reductions, Irena said deployment of renewable sources remains to be impeded by the perception that although sustainable, they are not as economically competitive as conventional power sources.

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In order for renewables to become “default economic option” for power generation, costs will have to continue to decline and performance to further improve, according to the report. Given that this occurs, supporting policy measures should be put in place to overcome other market barriers unrelated to price, which hinder the widespread adoption of renewable energy technologies. – C. Dominguez

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