Global adoption of renewable energy reduces petroleum costs by $520 billion in 2022 – According to a new report by the International Renewable Energy Agency (IRENA), the global power sector saved $520 billion in petroleum costs last year as a result of renewable energy growth.
Approximately 86 percent (187 gigawatts) of newly commissioned renewable capacity in 2022 had lower costs than electricity generated from fossil fuels, indicating that the fossil fuel price crisis has accelerated the competitiveness of renewable energy.
The Renewable Power Generation Costs in 2022 report published by IRENA revealed that the addition of renewable energy in 2022 reduced the global electricity industry’s petroleum costs.
“New capacity added since 2000 reduced the sector’s fuel costs by at least $520 billion in 2022.” In non-OECD countries, new capacity additions in 2022 will reduce costs by up to $580 billion over their lifetimes.
Reducing CO2 emissions and local air pollutants would have substantial economic benefits in addition to these direct savings. Without the deployment of renewables over the past two decades, the economic disruption caused by the fossil fuel price increase in 2022 would have been significantly worse and may have been beyond the ability of many governments to mitigate with public funding.
Francesco La Camera, the agency’s director-general, stated, “IRENA sees 2022 as a true turning point in the deployment of renewables, as their cost-competitiveness has never been higher, despite persistent commodity and equipment price inflation.” The most impacted regions by the historic price surge were remarkably resilient, due in large part to the exponential growth of solar and wind power over the past decade.
“The business case for renewables is compelling today, but the world must add 1,000 GW of renewable power annually on average until 2030 to maintain 1.5°C within reach, which is more than three times the levels of 2022. It is impossible for a new energy system to evolve incrementally, as fossil fuels did.
“In preparation for the COP28 in Dubai later this year, today’s report demonstrates once again that renewables are the best climate solution available for countries to increase ambition and take cost-competitive action.”
Inflation in commodity and equipment costs in 2022 caused countries to experience markedly distinct cost trends in 2022, according to a new IRENA report. Globally, the weighted average cost of electricity decreased by 3 percent for utility-scale solar PV, 5 percent for onshore wind, 2 percent for concentrating solar power, 13 percent for bioenergy, and 22 percent for geothermal.
The report stated, “Only the costs for offshore wind and hydropower increased by 2% and 18%, respectively, due to China’s decreased contribution to offshore wind deployment in 2022 and cost overruns in a number of significant hydropower projects.
“Over the past 13 to 15 years, the cost of renewable energy generation from solar and wind sources has decreased. Solar and wind power became cost-competitive with fossil fuels without subsidies between 2010 and 2022.
The global weighted average cost of solar PV electricity decreased by 89 percent to $0.049/kWh, which is nearly one-third less expensive than the cheapest fossil fuel worldwide. In 2022, the cost of onshore wind decreased by 69 percent to $0.033/kWh, which is barely less than half the cost of the cheapest fossil fuel-powered option.
According to the report, anticipated high fossil fuel prices will solidify the structural shift in which renewable energy generation has become the least expensive source of new generation, even undermining existing fossil fuel generators.