Renewables Remain Cheapest Power Source Globally In 2024

Photo: WAM

In 2024, renewable energy continued to be cheaper than using coal, oil, or gas for electricity. This is what a new report by the International Renewable Energy Agency (IRENA) says. The report is called Renewable Power Generation Costs in 2024, and it shows that using renewable energy is saving the world a lot of money.

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Why Are Renewables Cheaper?

According to the report, there are three main reasons why renewable energy is cheaper:

1. Better Technology: Solar panels and wind turbines have become more advanced and efficient.

2. Competitive Supply Chains: Companies are making and selling these products in large numbers, which reduces costs.

3. Economies of Scale: When countries and companies produce something in large amounts, the price goes down for everyone.

How Much Cheaper Are Solar And Wind?

The report gives clear numbers:

• Solar Photovoltaics (PV): These solar systems were 41% cheaper than the cheapest fossil fuel options in 2024.

• Onshore Wind: This wind power was 53% cheaper than fossil fuels, making it the most affordable source of new electricity.

In simple words, if someone wanted to build a new power plant, building a wind or solar power plant was much cheaper than building a coal or gas power plant.

Exact Costs Per Kilowatt-Hour (kWh)

The cost of electricity is often measured in kilowatt-hours (kWh). According to IRENA:

• Onshore Wind: US$ 0.034 per kWh

• Solar PV: US$ 0.043 per kWh

This means if you used 1 kWh of electricity, wind power would cost about 3.4 cents and solar power about 4.3 cents. Fossil fuels cost more than twice these amounts in many places.

How Much New Renewable Capacity Was Added?

In 2024, 582 gigawatts (GW) of new renewable energy capacity was added around the world. This helped avoid using fossil fuels worth US$57 billion. That’s a huge saving for the planet.

Also, 91% of new renewable power projects were cheaper than building new fossil fuel power plants. This shows how strong the business case for renewables has become.

Other Benefits Of Renewables

Besides saving money, renewable energy has many other benefits:

• It reduces dependence on international fuel markets. Countries don’t need to buy expensive coal, oil, or gas from other countries.

• It improves energy security. If a country uses its own sun and wind, it is not affected by global fuel price changes.

Challenges Remain Despite Success

Even though the costs are going down, some problems are still there:

1. Geopolitical Problems: Trade tariffs and tensions between countries can make raw materials costlier.

2. Manufacturing Issues: Some supply chains are slow, especially if materials come from only one country like China.

3. Permitting Delays: Getting permission to build new projects takes time, especially in Europe and North America.

4. Limited Grid Capacity: In some areas, the electricity grid is not ready to take power from new renewable projects.

Where Costs Are Going Up Or Down

• Europe and North America: Here, costs may remain higher because of the problems mentioned above, such as delays in getting approval and grid capacity issues.

• Asia, Africa, and South America: These regions could see costs going down more quickly because they have high potential for solar and wind energy and are learning fast.

What Global Leaders Are Saying

The United Nations Secretary-General, António Guterres, said that clean energy is good economics. He added that the world is moving towards renewables and the fossil fuel age is ending. But he also said leaders need to remove barriers and increase finance to make sure everyone benefits from clean energy.

IRENA Director-General’s Views

Francesco La Camera, the Director-General of IRENA, said:

• The low cost of renewables is real and happening today.

• In 2024 alone, renewables helped avoid fossil fuel costs worth US$467 billion.

• Renewable energy is now cheaper than fossil fuels, and this has happened because of innovation, good policies, and growing markets.

But he also warned that rising tensions between countries and trade tariffs could slow down progress. He called for:

• International cooperation

• Open and strong supply chains

• Stable policies and investments, especially in developing countries.

He said the shift to renewable energy cannot be stopped, but how fast and fair it will be depends on the choices made today.

What Needs To Be Done To Scale Renewables?

IRENA’s report says that to keep renewables growing, countries need:

1. Stable Revenue Frameworks: Investors need to know they will earn steady money from these projects.

2. Power Purchase Agreements (PPAs): These agreements help projects get affordable finance.

3. Clear Policies: Unclear rules make investors worried, which slows down projects.

4. Better Grids: Many solar and wind projects are delayed because of poor grid connections or slow approvals.

Financing Costs – A Major Challenge

Financing costs remain very important. For example, in Africa and Europe, the cost to produce wind energy was about the same – US$0.052/kWh. But the structure of the cost was different:

• Europe: Most costs came from building the project.

• Africa: A big part of the cost came from higher financing costs.

This is because investors see Africa as riskier, so they charge higher interest rates. IRENA found the cost of capital (interest rate) was 3.8% in Europe but 12% in Africa. This makes projects in Africa more expensive even if they use the same technology.

New Technology Making Renewables Better

It’s not just wind and solar that are becoming cheaper. Battery storage systems, which store energy for later use, have also become cheaper:

• Since 2010, battery costs have fallen by 93%.

• In 2024, utility-scale batteries cost US$192 per kWh.

This has happened because of better production methods, improved materials, and making batteries on a large scale.

Role Of Artificial Intelligence (AI)

Digital technologies and AI tools are making renewable projects even better. AI helps in:

• Managing the grid efficiently

• Predicting electricity demand

• Improving performance of solar and wind plants

However, for these digital tools to work well, countries need to invest in digital infrastructure and grid modernisation.

This report by IRENA shows that renewable energy is now the smart choice not only for the environment but also for the economy. Countries that invest in solar and wind will save money, reduce pollution, and become more energy secure.

But the world needs to make sure that everyone, including poor countries, gets the chance to benefit from this clean and cheap energy future. The decisions leaders make today will decide how fast and fair this energy transition will be for all.