Renewable energy will soon overtake coal-based generation, which is rapidly falling throughout the coronavirus pandemic, according to GlobalData analysts.
A recent report from the International Renewable Energy Agency (IRENA) on the progress of renewable energy over the last decade shows 176GW of renewable generation was added to global grids last year. This included 97GW of solar photovoltaic (PV) power, 54GW of onshore wind power, 12GW of hydroelectric power, 6GW of bioenergy and 5GW of offshore wind.
Excluding bioenergy, the agency estimates relative to global capacity, the fastest cost reduction since 2010 has come from PV solar power. However, the sharpest fall in recent years has come from concentrating solar power, which has fallen from more than $200/MWh in 2017 to around $70/MWh expected in 2021.
The cost of PV generation fell 82% between 2010 and 2019 from $378/MWh to $68/MWh. In the same period, global PV generation rose from 40GW to 580GW.
Renewable energy set to become more affordable
The report says new PV projects commissioned competitively in 2021 will have “significantly lower costs” than the average cost in 2019. For PV generation, it expects it to fall to $39/MWh for utility-scale generation. It continues: “These values are cheaper than the marginal operating costs of an increasing number of existing coal-fired power plants, raising the risk that there are an increasing number of stranded assets.”
Citing a Carbon Tracker report from 2018, it says around 1200GW of current coal generation will be more expensive to run than current average PV prices.
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GlobalData analysts said the high cost of coal and low demand for power has led to coal mines and coal-powered plants slowing production.
In the UK, all but four coal-based generating units have paused operation. This is partly because of low electricity demand, which has allowed the country to go more than 20 days without using coal-based electricity as of the end of April.
In India, around 40 coal-based power units with a combined capacity of 30GW have paused their operations during coronavirus, while renewable generation continues. Due to its lockdown, several coal-importing ports have declared force majeure events leading to declining exports of coal.
GlobalData senior power analyst Somik Das said: “Markets such as China, India and Vietnam, where a significant portion of the installed generation capacity is coal-based, will witness decline in electricity generation from coal. Coal consumption in developed markets has already been low, but the ongoing drop in electricity demand combined with the drop in gas prices could further accelerate the closure of coal-based generation plants.”