Renewables Led To Saving Of $520bn in Fuel Costs Globally: IRENA

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A new report by the International Renewable Energy Agency (IRENA) claimed that the global power sector saved $520 billion in fuel costs last year, owing to the increasing adoption of renewable energy sources. The report underscores how the ongoing fossil fuel price crisis catalyzed the competitiveness of renewable power sources.

In 2022, 86 percent, equivalent to 187 Gigawatts (GW), of the newly commissioned renewable energy capacity boasted lower costs than traditional fossil fuel-fired electricity. Titled ‘Renewable Power Generation Costs in 2022’, the IRENA report details how the introduction of renewable power in 2022 mitigated the electricity sector’s fuel expenses on a global scale.

When considering new capacity additions since 2000, the electricity sector’s fuel bill in 2022 was curtailed by a minimum of $520 billion. The report said that the cost savings projected in non-OECD (The Organization for Economic Cooperation and Development) countries from the lifespan of new capacity additions in 2022 alone could amount to a substantial $580 billion. 

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Beyond direct cost savings, embracing renewable energy also translated to considerable economic benefits by reducing carbon dioxide emissions and local air pollutants. The IRENA report underscores that had renewables not been integrated over the past two decades, the economic repercussions of the fossil fuel price shock experienced in 2022 would have been even more severe, potentially exceeding the capacity of many governments to mitigate through public funding. 

IRENA’s report emphasizes the indispensable role of competitively-priced renewables in tackling contemporary energy and climate challenges and accelerating the transition towards adhering to the 1.5°C warming limit in climate agreements. As countries globally strive to phase out fossil fuels and limit the associated macroeconomic disruptions en route to achieving net-zero emissions, renewables are integral to these strategies.

Francesco La Camera, Director-General of IRENA, stated, “IRENA sees 2022 as a definitive turning point in renewable deployment, with unprecedented cost competitiveness despite prevalent inflation in commodity and equipment costs. The resilience demonstrated by the regions most affected by the historic price shock can be largely attributed to the substantial increase in solar and wind energy over the past decade.” 

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La Camera highlighted the urgency for a rapid transformation, asserting, “Today, the business case for renewables is compelling, but the world must add 1,000 GW of renewable power annually on average every year until 2030 to keep the 1.5°C target achievable – more than three times the 2022 levels. There is no time for a gradual evolution of the energy system, as was the case for fossil fuels. This report again underscores that renewables offer countries the most viable climate solution to elevate their ambitions and take cost-competitive actions.” 

The IRENA report delves into the varying trends of costs experienced by countries due to commodity and equipment cost inflation in 2022. On a global scale, the weighted average cost of electricity dropped for utility-scale solar photovoltaics (PV) by 3 percent, onshore wind by 5 percent, concentrating solar power by 2 percent, bioenergy by 13 percent, and geothermal by 22 percent. Only offshore wind and hydropower witnessed cost increases of 2 percent and 18 percent, respectively. These increases were attributed to China’s reduced share in offshore wind deployment and cost overruns in large hydropower projects.

 The report ultimately underscored the remarkable decline in renewable power generation costs from solar and wind sources over the past decade. Between 2010 and 2022, solar and wind power costs reached parity with fossil fuels even without financial support.