A comprehensive new analysis from an international energy agency has confirmed what many have suspected: solar and wind power are now the cheapest sources of new electricity in the vast majority of countries worldwide.
The Numbers
The report, which analyzed energy costs across 150 nations, found that utility-scale solar projects cost an average of 30 percent less than new coal plants. Onshore wind is 25 percent cheaper. Even offshore wind, long the most expensive renewable, is now cost-competitive with fossil fuels in many markets.
Why Costs Have Fallen
Several factors have driven the dramatic cost reduction:
- Scale — global production of solar panels has increased tenfold in a decade
- Technology — panel efficiency continues to improve year over year
- Financing — lower perceived risk has reduced the cost of capital for renewable projects
- Policy — government incentives and carbon pricing have tilted the playing field
- Experience — installers and operators have become more efficient with each project
The Storage Challenge
The remaining obstacle is intermittency — the sun doesn’t always shine, and the wind doesn’t always blow. But battery storage costs have fallen by 90 percent over the past decade, making it increasingly viable to store renewable energy for use during low-generation periods.
“The economics have crossed a tipping point,” said one energy economist. “This is no longer a question of whether the transition will happen — it’s a question of how fast.”
