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The surge in fossil fuel prices last year made renewable energy sources more competitive, with 86% of all new installed renewable capacity exhibiting lower costs in 2022 compared to electricity powered by fossil fuels, the International Renewable Energy Agency (IRENA) said in a new report on Tuesday.
In 2022, 187 gigawatts (GW), or 86% of all the newly commissioned renewable capacity, had lower costs than fossil fuel-fired electricity, the agency said.
Renewable energy capacity added over the past two decades helped to reduce the electricity sector fuel bill by at least $520 billion in 2022, according to IRENA. In developing countries, just the saving over the lifetime of new capacity additions in 2022 will reduce costs by up to $580 billion, according to the agency.
“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,” the agency’s Director-General Francesco La Camera said.
“The most affected regions by the historic price shock were remarkably resilient, in large part thanks to the massive increase of solar and wind in the last decade.”
The weighted-average cost of electricity fell for utility-scale solar PV by 3%, for onshore wind by 5%, for concentrating solar power by 2%, for bioenergy by 13%, and for geothermal by 22%, IRENA’s report showed.
The costs for offshore wind and hydropower increased by 2% and 18%, respectively, due to the reduced share of China in offshore wind deployment in 2022 and cost overruns in a number of large hydropower projects.
While the business case for renewable energy becomes increasingly compelling, the world must more than triple annual capacity installations by 2030 to keep the 1.5-degree Celsius scenario within reach, La Camera said.
Earlier this year, the International Energy Agency (IEA) said that global investment in solar power generation is set to eclipse investment in oil production in 2023, for the first time ever. For 2023, the IEA expects total investments in energy at $2.8 trillion, of which $1.74 trillion will go to clean energy and technologies, and the remaining $1.05 trillion to fossil fuels.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com