The ongoing fossil fuel price crisis has expedited the competitiveness of renewable power sources. In 2022, approximately 86 percent (187 gigawatts) of the newly installed renewable capacity boasted lower costs compared to fossil fuel-fired electricity.
Today, the International Renewable Energy Agency (IRENA) published “Renewable Power Generation Costs in 2022,” which reveals that the additional renewable power integrated in 2022 led to a decrease in the global electricity sector’s fuel expenses. The newly added capacity since 2000 resulted in a reduction of at least $520 billion in the electricity sector’s fuel bill for the year 2022.
The savings realized from the lifespan of new capacity additions in 2022 in non-OECD countries alone are expected to result in cost reductions of up to $580 billion.
In addition to the significant cost savings mentioned earlier, the adoption of renewable energy sources would also yield substantial economic advantages by reducing CO2 emissions and local air pollutants. The deployment of renewables over the past two decades has played a crucial role in mitigating the economic impact of the fossil fuel price shock in 2022. Without renewable energy, the disruption would have been much more severe, potentially exceeding the capacity of many governments to mitigate through public funding.
The latest report from IRENA reaffirms the crucial role of cost-competitive renewables in tackling the present energy and climate crises. By accelerating the transition in alignment with the 1.5°C warming limit, renewables serve as essential components in countries’ endeavors to rapidly decrease and eventually eliminate the use of fossil fuels. This shift not only helps limit the macroeconomic consequences associated with fossil fuels but also facilitates the pursuit of net-zero emissions.
Francesco La Camera, director-general of IRENA, expressed that 2022 marks a significant turning point in the deployment of renewables. Despite the prevailing commodity and equipment cost inflation globally, the cost-competitiveness of renewables has reached unprecedented levels. The regions most affected by the historic price shock demonstrated remarkable resilience, largely attributed to the substantial increase in solar and wind installations over the past decade.
Adding to his remarks, La Camera stated that the current business case for renewables is highly compelling. He emphasized that to maintain the possibility of limiting global warming to 1.5°C, an average annual addition of 1,000 GW of renewable power is required until 2030. This amount is more than three times the levels achieved in 2022. He noted that unlike the gradual evolution of the fossil fuel-based energy system, there is no time for renewables to evolve gradually. In light of the upcoming COP28 in Dubai later this year, the report released today reaffirms that countries have the most effective climate solution in renewables. This provides them with the opportunity to enhance ambition and take cost-competitive actions.
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