As prices continuously rise and the planet edges closer to the brink of calamity, many people are wondering what the cheapest energy for the home is. The share of renewables in global energy generation reached nearly 28% in 2020 and is projected to approach 49% by 2050, according to the U.S. Energy Information Administration. Fortunately, the cost of renewable energy has been steadily declining, making it more accessible and more feasible as a long-term alternative to fossil fuels. So is solar energy worth it? And what is the cheapest form of energy in the United States? Check out this visualization by Solar Power Guide to learn more and discover just how ideal renewable energy is becoming:
Here is a breakdown of the cost of renewable energy according to our research, ranked by least to most expensive:
Compare these costs to ultra-supercritical coal, which costs $72.78 per megawatt-hour, more than double the cost of solar energy. And ultra-supercritical coal is a type of coal plant that is more efficient than traditional coal plants: Energy coming from older plants is even more expensive. The base cost of solar energy is only $23.52 per megawatt-hour, which is almost half the base cost of coal, $43.80 per megawatt-hour.
The cheapest renewable energy is indeed solar energy. The International Energy Agency’s World Energy Outlook 2020 stated, “With sharp cost reductions over the past decade, solar PV is consistently cheaper than new coal- or gas-fired power plants in most countries, and solar projects now offer some of the lowest-cost electricity ever seen.” This stayed consistent for the International Energy Agency’s 2021 report, which explained, “In most markets, solar PV or wind now represents the cheapest available source of new electricity generation.” So is renewable energy cheaper in the long run? Absolutely! Beyond the cost benefits of renewable energy, it is also far more environmentally friendly. Renewable energy invests in people and in the planet.
Yes! Solar power has recently become the cheapest energy source in history, as mentioned above. And of the wind, solar, and other renewable energy sources in use in 2020, 62% were cheaper than the cheapest new fossil fuel. The director general of the International Renewable Energy Agency, Francesco La Camera, stated, “Today, renewables are the cheapest source of power.”
Solar is the cheapest form of energy due to the lower cost of building panels to harvest energy from the sun. Additionally, scientists and engineers are actively researching technology that will create high input for smaller panels, lower costs of fabrication for panels, longer life spans, and improved recycling and reuse methods. It seems that solar energy has a bright future, both for individual households and larger-scale projects.
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A report published by the International Renewable Energy Agency (IRENA) earlier this year found that the cost of renewables is falling at such a rapid rate that it will be a consistently cheaper electricity source than traditional fuels in only a few years'' time, posing a mounting threat to the fossil fuel industry.
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Just what are the cheapest renewable energy sources? Power Technology investigates.
The IRENA Renewable Power Generation Costs in 2017 report found that solar and onshore wind are the cheapest energy sources, reporting that in 2017 wind turbine prices had an average cost of $0.06 per kWh, though some schemes were $0.04 per kWh. The cost of solar photovoltaic (PV) had fallen to $0.10 per kWh.
In comparison, electricity generation based on fossil fuels typically falls in a price range of $0.05 to $0.17 per kWh.
Extensive investment and research into these renewable sources have caused prices to continue declining over the years. Between 2010 and 2017, the price of solar PV modules fell by almost three-quarters, while wind turbine prices dropped by half over the same period. Prices are continuing to decline, and a series of record-low auction prices for solar PV, concentrated solar power, onshore wind and offshore wind power were set in 2016-2017.
IRENA predicts that within the next two years, solar and wind projects will be able to deliver electricity for as little as $0.03 per kWh.
On the more costly end of renewable energy is tidal power, currently up to ten times more expensive than more established renewables such as wind and solar.
Numerous tidal projects have been scrapped in recent years due to high costs, for example the Swansea Bay tidal lagoon in Wales. The UK Government rejected plans for the £1.3bn project in January this year, deeming it too expensive compared to alternatives such as offshore windfarms and nuclear power.
The expense of tidal projects is predominantly due to the fact that the sector is still in the early stages of development, compared with wind and solar which have received far more investment and research to pull down costs and improve efficacy. So far, government bodies have been the only ones to invest in the budding sector, while solar and wind have received support from individuals and smaller organisations.
Strategy manager at the Energy Technologies Institute (ETI) Stuart Bradley told Power Technology in December last year that the technology has also been slow to reach market due to "uncertainty in terms of return for commercial investors and a lack of evidence around the associated risks", something which is again due to the early stage of the industry.
However, advocates for tidal power stress that while construction costs are high, tidal power has one of the lowest operation and maintenance costs, with studies showing they are usually less than 0.5% of initial capital costs. As such, some see it as an untapped source with potentially great benefits.
Despite the growing dominance of solar and wind in the energy sector, the need to develop affordable storage solutions to balance out intermittency issues continues to grow. Although the energy sources are themselves free and infinite, bar on overcast or calm days, the equipment and materials required to collect, store and transport the energy put an additional price tag on these sources.
Financial firm Lazard found that when the cost of batteries and inverters is added to utility-scale PVs for ten hours of storage, the price rises from $46 per MWh to $82, a higher figure than the $60 per MWh and $68 per MWh for coal and natural gas, respectively.
Lazard''s analysis also found that vanadium flow batteries had a minimum levelised cost of storage (LCOS) of $184 per MWh for distribution network applications and $209 per MWh for peaker replacement. These costs for lithium-ion were $272 and $282, respectively.
The firm expressed its belief that the high price of batteries would prevent renewables from completely overtaking traditional power generation sources, saying: "Although alternative energy is increasingly cost-competitive and storage technology holds great promise, alternative energy systems alone will not be capable of meeting the baseload generation needs of a developed economy for the foreseeable future."
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Abu Dhabi, United Arab Emirates, 22 June, 2021 – The share of renewable energy that achieved lower costs than the most competitive fossil fuel option doubled in 2020, a new report by the International Renewable Energy Agency (IRENA) shows. 162 gigawatts (GW) or 62 per cent of total renewable power generation added last year had lower costs than the cheapest new fossil fuel option.
Renewable Power Generation Costs in 2020 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. With costs at low levels, renewables increasingly undercut existing coal’s operational costs too. Low-cost renewables give developed and developing countries a strong business case to power past coal in pursuit of a net zero economy. Just 2020’s new renewable project additions will save emerging economies up to USD 156 billion over their lifespan.
“Today, renewables are the cheapest source of power,” said IRENA’s Director-General Francesco La Camera. “Renewables present countries tied to coal with an economically attractive phase-out agenda that ensures they meet growing energy demand, while saving costs, adding jobs, boosting growth and meeting climate ambition. I am encouraged that more and more countries opt to power their economies with renewables and follow IRENA’s pathway to reach net zero emissions by 2050.”
“We are far beyond the tipping point of coal,” La Camera continued. “Following the latest commitment by G7 to net-zero and stop global coal funding abroad, it is now for G20 and emerging economies to match these measures. 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. The 534 GW of renewable capacity added in emerging countries since 2010 at lower costs than the cheapest coal option are reducing electricity costs by around USD 32 billion every year.
2010-2020 saw a dramatic improvement in the competitiveness of solar and wind technologies with CSP, offshore wind and solar PV all joining onshore wind in the range of costs for new fossil fuels capacity, and increasingly outcompeting them. Within ten years, the cost of electricity from utility-scale solar PV fell by 85 per cent, that of CSP by 68 per cent, onshore wind by 56 per cent and 48 per cent for offshore wind. With record low auction prices of USD 1.1 to 3 cents per kWh today, solar PV and onshore wind continuously undercut even the cheapest new coal option without any financial support.
IRENA’s report also shows that new renewables beat existing coal plants on operating costs too, stranding coal power as increasingly uneconomic. In the United States for example, 149 GW or 61 per cent of the total coal capacity costs more than new renewable capacity. Retiring and replacing these plants with renewables would cut expenses by USD 5.6 billion per year and save 332 million tonnes of CO2, reducing emissions from coal in the United States by one-third. In India, 141 GW of installed coal is more expensive than new renewable capacity. In Germany, no existing coal plant has lower operating costs than new solar PV or onshore wind capacity.
Globally, over 800 GW of existing coal power costs more than new solar PV or onshore wind projects commissioned in 2021. Retiring these plants would reduce power generation costs by up to USD 32.3 billion annually and avoid around 3 giga tonnes of CO2 per year, corresponding to 9 per cent of global energy-related CO2 emissions in 2020 or 20 per cent of the emissions reduction needed by 2030 for a 1.5°C climate pathway outlined in IRENA’s World Energy Transitions Outlook.
The outlook till 2022 sees global renewable power costs falling further, with onshore wind becoming 20-27 per cent lower than the cheapest new coal-fired generation option. 74 per cent of all new solar PV projects commissioned over the next two years that have been competitively procured through auctions and tenders will have an award price lower than new coal power. The trend confirms that low-cost renewables are not only the backbone of the electricity system, but that they will also enable electrification in end-uses like transport, buildings and industry and unlock competitive indirect electrification with renewable hydrogen.
About Cheapest energy source
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