RIYADH: Renewable energy adoption in the new millennium has led to a substantial $520 billion reduction in the global electricity sector’s fossil fuel bills in 2022, as revealed by the latest report from the International Renewable Energy Agency.
The report, titled Renewable Power Generation Costs in 2022, highlighted that around 86 percent of the newly commissioned renewable capacity last year, equivalent to 187 gigawatts, proved to be more cost-effective than traditional fossil fuel-based electricity.
The savings were even more significant in non-Organisation for Economic Co-operation and Development (nations, where the capacity added in 2022 was projected to annually cut costs by up to $22.9 billion.
Beyond these immediate cost reductions, the report noted that the economic gains from diminishing carbon oxide emissions and air pollutants are immense, providing a buffer against the fossil fuel price shocks that could have otherwise resulted in significant economic disruption.
“IRENA sees 2022 as a veritable turning point in the deployment for renewables as its cost-competitiveness has never been greater despite the lingering commodity and equipment cost inflation around the world,” said IRENA Director General Francesco La Camera in the report.
La Camera further emphasized the urgent need to ramp up the annual renewable power addition to 1,000 gigawatts by 2030 — three times the 2022 levels — to meet climate goals in line with the 1.5 degrees Celsius warming limit.
“There is no time for a new energy system to evolve gradually, as was the case for fossil fuels. In preparation for the COP28 in Dubai later this year, today’s report shows again that with renewables, countries have the best climate solution to raise ambition and take actions in a cost-competitive way,” La Camera added.
The report also highlighted inflation-induced increases in renewable energy costs. However, it underlined that the weighted average cost of electricity for various types of renewable energy actually decreased on a global scale in 2022.
Utility-scale solar photovoltaic technology saw a 3 percent cost reduction, while onshore wind costs fell by 5 percent. Bioenergy and geothermal saw even more substantial drops, plummeting by 13 and 22 percent, respectively.
However, the opposite trend was observed in offshore wind and hydropower, with costs increasing due to factors like reduced Chinese offshore wind deployment and cost overruns in hydropower projects.
The report also underscored that solar and wind energy have not only become cost-competitive but have outperformed fossil fuels over the last decade.
The global weighted average cost of electricity generated from solar PV sources plunged by 89 percent to just $0.049 per kilowatt-hour, making it almost one-third cheaper than the least expensive fossil fuel source.
Onshore wind costs similarly dropped by 69 percent to $0.033 per kWh in 2022.
As fossil fuel prices continue to rise, renewable energy is emerging as an increasingly attractive and economically viable option for new power generation, the study said.
This shift is not only shielding consumers from the volatility of fossil fuel prices but also enhancing energy security in a rapidly changing global energy landscape, it added.
