Costs for renewables continued to fall in 2021 as supply chain challenges and rising commodity prices were yet to impact project costs fully. The cost of electricity from onshore wind fell by 15%, offshore wind by 13%, and solar by 13% compared to 2020.

The International Renewable Energy Agency (IRENA) revealed the numbers in their recently published report, ‘Renewable Power Generation Costs in 2021’.

The report finds that almost two-thirds or 163 GW of newly installed renewable power in 2021 had lower costs than the world’s cheapest coal-fired option in the G20 nations. IRENA estimates that, given the current high fossil fuel prices, the renewable power added in 2021 will save around $55 billion from global energy generation costs in 2022.

“Renewables are by far the cheapest form of power today. 2022 is a stark example of how economically viable new renewable power generation has become. Renewable power frees economies from volatile fossil fuel prices and imports, curbs energy costs, and enhances market resilience – even more so if today’s energy crunch continues,” said Francesco La Camera, Director-General, IRENA.”

As per the report, the global weighted average LCOE (levelized cost of electricity) of new utility-scale solar power projects commissioned in 2021 fell by 13% year-on-year (YoY), from $0.055/kWh to $0.048/kWh.

The global weighted average LCOE of new onshore wind projects commissioned in 2021 fell by 15% YoY from $0.039/kWh to $0.033/kWh. The global weighted average LCOE of new offshore wind projects commissioned in 2021 fell 13% YoY from $0.086/kWh to $0.075/kWh.

The global weighted average cost of newly commissioned solar and wind power projects in 2021 fell despite rising commodity and renewable equipment prices. In 2021, the global weighted average LCOE of new utility-scale solar was 11% lower than the cheapest new fossil fuel-fired power generation option, and that of onshore wind was 39% lower.

The report suggests that not all materials cost increases have been passed through to equipment prices and project costs. If material costs remain elevated, the price pressures in 2022 will be more pronounced. The overall gains of cost-competitive renewables might overshadow increases compared to higher fossil fuel prices.

Early this year, Mercom reported that the average cost of large-scale solar projects in India during the first quarter (Q1) of the calendar year (CY) 2022 was approximately ₹43.5 million (~$544,006)/MW, a 19% YoY increase, according to Mercom’s recently released Q1 2022 India Solar Market Update.

In its Renewable Capacity Statistics 2022 report, IRENA revealed that the renewable generation capacity increased by 9.1% to 257 GW in 2021 compared to last year, taking the cumulative global renewable generation capacity to 3,064 GW. Solar capacity expansions surged by 19% during the year globally to record 133 GW of installations.

According to the International Energy Agency, renewable energy is expected to account for 90% of the global power capacity increase in 2021 and 2022.