Renewable energy set to be cheaper than fossil fuels by 2020, according to new report

According to a new report, renewable energy will be cheaper than fossil fuels in two years, Experts predict that investment in green infrastructure projects will lead to decreases in the cost of energy for consumers. 

IRENA believes there are three main reasons why this will happen: improvements in technology, a competitive market, and more experienced developers in the industry. The more renewable energy capacity increases, the further it will lower electrical costs. As it doubles, investment drops by nine percent and electricity generation costs drop by 15 percent.

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”. The report looked specifically at the relative cost of new energy projects being commissioned.

Prices could be as low as three cents per kilowatt-hour for onshore wind and solar photovoltaic projects over the next two years. When renewable energy becomes cheaper, consumers will benefit from investment in green infrastructure. The current cost for fossil fuel power generation ranges from around 4p to 12p per kilowatt hour across G20 countries.

“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.

Of those technologies, most will either be at the lower end of the cost range or actually undercutting fossil fuels.

“Turning to renewables for new power generation is not simply an environmentally conscious decision, it is now – overwhelmingly – a smart economic one.”

“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.

Even though much of the focus was on solar and wind, hydropower, bioenergy, and geothermal sources were all part of the ongoing process to make renewable energy a more viable option.

“The cheaper you install it, the better it is for everyone.”