‘Turning to renewables for new power generation is not simply an environmentally conscious decision, it is now – overwhelmingly – a smart economic one’
Renewable energy will be cheaper than fossil fuels in two years, according to a new report.
Experts predict that investment in green infrastructure projects will lead to decreases in the cost of energy for consumers.
Continuous technological improvements have led to a rapid fall in the cost of renewable energy in recent years, meaning some forms can already comfortably compete with fossil fuels.
The report suggests this trend will continue, and that by 2020 “all the renewable power generation technologies that are now in commercial use are expected to fall within the fossil fuel-fired cost range”.
Of those technologies, most will either be at the lower end of the cost range or actually undercutting fossil fuels.
“This new dynamic signals a significant shift in the energy paradigm,” said Adnan Amin, director-general of the International Renewable Energy Agency (IREA), which published the report.
“Turning to renewables for new power generation is not simply an environmentally conscious decision, it is now – overwhelmingly – a smart economic one.”
The report looked specifically at the relative cost of new energy projects being commissioned.
As renewable energy becomes cheaper, consumers will benefit from investment in green infrastructure.
“If the stuff you’re building to generate electricity costs less, the end effect of that is having to pay less for the electricity that comes from it,” Jonathan Marshall, energy analyst at the Energy and Climate Intelligence Unit (ECIU) told The Independent.
“The cheaper you install it, the better it is for everyone.”
The current cost for fossil fuel power generation ranges from around 4p to 12p per kilowatt hour across G20 countries.
By 2020, IREA predicted renewables will cost between 2p and 7p, with the best onshore windand solar photovoltaic projects expected to deliver electricity by 2p or less next year.
Other methods of producing renewable energy, such as offshore wind farms and solar thermal energy, are not yet as competitive as fossil fuels.
However, the results of recent renewable power auctions for projects to be commissioned in the coming years suggest these forms too are due to drop in price.
Auctions provide a useful means of predicting the future cost of electricity.
“These cost declines across technologies are unprecedented and representative of the degree to which renewable energy is disrupting the global energy system,” said Mr Amin.