Solar, onshore wind to fall below cost of fossil fuel for first time

Four fifths of large-scale solar capacity to be commissioned next year shows lower prices than the cheapest new coal-fired, oil or natural gas sources. (Shutterstock)
Updated 29 May 2019

Solar, onshore wind to fall below cost of fossil fuel for first time

  • Record low solar auction prices in Saudi Arabia and UAE reflect falling cost of renewables

LONDON: Electricity generated by onshore wind and solar photovoltaic (PV) technologies will in the next year be consistently cheaper than from any fossil fuel source, a report showed on Wednesday, boosting the case for energy sources that do not emit carbon.
The trend for cut-price renewable energy is already set but the report by the International Renewable Energy Agency (IRENA) gives fresh evidence of the speed of the decline, driven by increased production runs and technology improvements.
“Onshore wind and solar PV are set by 2020 to consistently offer a less expensive source of new electricity than the least-cost fossil-fuel alternative without financial assistance,” said IRENA, a government-backed body that aims to support countries in their transition to sustainable energy sources.
The global weighted average cost of electricity generated by concentrated solar power fell by 26 percent last year from a year earlier, data compiled by the agency showed. Bioenegy fell by 14 percent, solar PV and onshore wind by 13 percent, hydropower by 12 percent and geothermal and offshore wind by 1 percent.
Costs of $0.03 to $0.04 per kilowatt hour (kWh) for onshore wind and solar PV are already possible in some parts of the world.

 

Record-low auction prices for solar PV over the past couple of years in Chile, Mexico, Peru, Saudi Arabia, and the United Arab Emirates for example have seen a cost as low as $0.03/kWh, IRENA found.
More than three quarters of onshore wind and four fifths of large-scale solar PV capacity to be commissioned next year shows lower prices than the cheapest new coal-fired, oil or natural gas sources, the report said.
At the start of last year, IRENA forecast the global average cost of electricity could fall to less than $0.049/kWh for onshore wind and $0.055/kWh for solar PV by 2020.
“A year later, the potential value for onshore wind in 2020 has dropped a further 8 percent to $0.045/kWh, while that of solar PV has dropped 13 percent to $0.048/kWh,” said the report, based on data from IRENA’s own members, business journals, industry groups, consultancies, governments, auctions and tenders.
As well as 160 countries, IRENA’s membership includes utilities, project developers, research institutes and companies, all of which provided data for its Renewable Cost Database. 

FASTFACTS

26 %

The global weighted average cost of electricity generated by concentrated solar power fell by 26 percent last year from a year earlier.


Oil prices surge after attacks hit Saudi output

Updated 16 September 2019

Oil prices surge after attacks hit Saudi output

  • The Houthi attacks hit two Aramco sites and effectively shut down six percent of the global oil supply
  • President Donald Trump said Sunday the US was ‘locked and loaded’ to respond to the attacks

HONG KONG: Oil prices saw a record surge Monday after attacks on two Saudi facilities slashed output in the world’s top producer by half, fueling fresh geopolitical fears as Donald Trump blamed Iran and raised the possibility of a military strike on the country.
Brent futures surged $12 in the first few minutes of business — the most in dollar terms since they were launched in 1988 and representing a jump of nearly 20 percent — while WTI jumped more than $8, or 15 percent.
Both contracts pared the gains but were both still more than 10 percent up.
The attack by Tehran-backed Houthi militia in neighboring Yemen, where a Saudi-led coalition is bogged down in a five-year war, hit two sites owned by state-run giant Aramco and effectively shut down six percent of the global oil supply.
Trump said Sunday the US was “locked and loaded” to respond to the attack, while Secretary of State Mike Pompeo said: “The United States will work with our partners and allies to ensure that energy markets remain well supplied and Iran is held accountable for its aggression.”
Tehran denies the accusations but the news revived fears of a conflict in the tinderbox Middle East after a series of attacks on oil tankers earlier this year that were also blamed on Iran.
“Tensions in the Middle East are rising quickly, meaning this story will continue to reverberate this week even after the knee-jerk panic in oil markets this morning,” said Jeffrey Halley, senior market analyst at OANDA.
Trump authorized the release of US supplies from its Strategic Petroleum Reserve, while Aramco said more than half of the five million barrels of production lost will be restored by tomorrow.
But the strikes raise concerns about the security of supplies from the world’s biggest producer.
Oil prices had dropped last week after news that Trump had fired his anti-Iran hawkish national security adviser John Bolton, which was seen as paving the way for an easing of tensions in the region.
“One thing we can say with confidence is that if part of the reason for last week’s fall in oil and improvement in geopolitical risk sentiment was the news of John Bolton’s sacking ... and thoughts this was a precursor to some form of rapprochement between Trump and Iran, then it is no longer valid,” said Ray Attrill at National Australia Bank.