All renewables to be competitive with fossil fuels by 2020

Source: IRENA

From EcoWatch:

According to a cost analysis from the International Renewable Energy Agency (IRENA), the best onshore wind and solar photovoltaic (PV) projects could deliver electricity for $0.03 per kilowatt-hour (kWh) [$30/MWh] by 2019, much lower than the current cost of power from fossil fuels, which ranges from $0.05 to $0.17 per kWh [$50 to $170/MWh].

The analysis highlights the dramatic dip in solar and wind prices over the last decade. Onshore wind has fallen by around a quarter since 2010, with solar PV electricity costs falling by 73 percent in that time. Additionally, solar PV costs are expected to halve by 2020.

In the last 12 months alone, the global weighted average costs of onshore wind and solar PV have stood at $0.06 and $0.10 per kWh [$60 to $100/MWh], respectively. Recent auction results also suggest future projects will significantly undercut these averages—onshore wind is now routinely commissioned for $0.04 per kWh [$40/MWh]. Additionally, record low prices for solar PV in Abu Dhabi, Chile, Dubai, Mexico, Peru and Saudi Arabia have made $0.03 kWh (and below) [$30/MWh] the new benchmark.

Other types of renewable technologies—including hydropower ($0.05 per kWh) [$50/MWh], bioenergy and geothermal ($0.07 per kWh) [$70/MWh]—have also been cost competitive with fossil fuels over the last 12 months, the report found.

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These are ranges reflecting different conditions in different countries round the world.  For example, high interest rates favour fossil-fuelled power stations, because more of their costs are in the future, which at a high discount rate have a lower present value than they would at a low discount rate.  Wind and solar, on the other hand have no fuel costs and low maintenance costs, so they are favoured by low interest rates.  There are also learning curves--some countries just starting out on the path to renewables will have higher renewables costs than those which have learnt how to install and integrate renewables into their grids.  So it is possible that in some locations, new coal is still competitive with new wind and solar.  The problem for an investor is that the price trends are obvious, which combined with how long it takes to build a new coal power station plus the lengthy life of such a power station, means that they risk being uneconomic.   By 2020, this will be even more obvious.  It's hard to see how coal power stations won't be losing money hand over fist by the mid-2020s.  Meanwhile, gas will likely be retained only for peaking power and emergencies.