Renewable Power Generation Costs in shows that costs for renewable technologies continued to fall significantly year-on-year. Concentrating solar power CSP fell by 16 per cent, onshore wind by 13 per cent, offshore wind by 9 per cent and solar PV by 7 per cent. Low-cost renewables give developed and developing countries a strong business case to power past coal in pursuit of a net zero economy.
We cannot allow having a dual-track for energy transition where some countries rapidly turn green and others remain trapped in the fossil-based system of the past. Global solidarity will be crucial, from technology diffusion to financial strategies and investment support. We must make sure everybody benefits from the energy transition. The renewable projects added last year will reduce costs in the electricity sector by at least USD 6 billion per year in emerging countries, relative to adding the same amount of fossil fuel-fired generation.
Two-thirds of these savings will come from onshore wind, followed by hydropower and solar PV. Cost savings come in addition to economic benefits and reduced carbon emissions. Next year, up to 1 gigawatts GW of existing coal capacity could cost more to operate than the cost of new utility-scale solar PV, the report shows.
Replacing the costliest GW of coal with solar PV and onshore wind next year would cut power system costs by up to USD 23 billion every year and reduce annual emissions by around 1.
Renewable investments are stable, cost-effective and attractive offering consistent and predictable returns while delivering benefits to the wider economy. Renewables must be the backbone of national efforts to restart economies in the wake of the COVID outbreak. With the right policies in place, falling renewable power costs, can shift markets and contribute greatly towards a green recovery. Renewable electricity costs have fallen sharply over the past decade, driven by improving technologies, economies of scale, increasingly competitive supply chains and growing developer experience.
But these changes are still not enough to reduce greenhouse gas at the rate needed to curb the worst impacts of climate change. While coal plants have been shuttering across the country, the fracking boom has brought in a glut of cheap fossil gas. While this abundant and affordable fuel emits up to 60 percent less carbon dioxide when burned compared to coal, it still contributes to climate change, including from the notorious methane leakages from its facilities.
Oil also still accounts for a large share of polluting emissions due to its use in powering cars and trucks. In fact, transportation accounts for more emissions than any other sector in the country. Sometimes, she adds, the regulatory structure of utilities actually makes it more profitable to keep a coal or natural gas plant running. Langer says this is especially true for the state-regulated monopolies that supply power in about half of US states.
These investor-owned utilities are guaranteed a certain rate of return on their investments in power facilities, which basically guarantees continued earnings in exchange for running those plants.
That may change soon, though. The cost of building new renewables is becoming increasingly competitive with the cost of adding additional capacity to existing fossil fuel facilities. In addition to being already heavily invested in fossil fuels, there is a lot of inertia in the system due to long-term contracts between utilities, energy producers, and mining companies.
Market forces and monopolies aside, there are few other, more tangible barriers to a widespread renewable roll out. The windiest parts of the country—often in the interior regions like the Great Plains—have fewer people to use that power than crowded coastal cities. These challenges of intermittency and geography are not insurmountable—batteries and water can store energy, and better transmission systems can be built.
But the solutions will require massive investments to develop and build the needed infrastructure. In the midst of pandemic-induced high unemployment and low interest rates, renewables and their now-cheap prices could finally have their moment. If affluent countries invest in renewables now, he adds, those technologies will grow even more affordable and therefore more likely to be adopted worldwide to meet increasing energy demands.
In the US, the federal government can play a huge role in these investments. It can borrow at low interest rates and use that advantage to help energy transition projects at state and local levels.
Paul explains that this could take the form of a national climate bank, backed by the federal government, that issues bonds for local decarbonization efforts.
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