Global wind and solar technologies continued to see massive cost declines last year, but observers warn that the full impacts of the current supply chain and raw materials crisis have not yet fully played themselves out. felt in the energy markets.

In a new reportThe International Renewable Energy Agency (IRENA) estimates that wind and solar technologies achieved double-digit cost reductions in 2021, but warned that supply chain pressures and a spike in commodity prices could hamper this progress in 2022.

Last year, the global cost of onshore wind energy fell by 15%, offshore wind projects by 13% and the cost of solar PV by 13%, according to the IRENA report.

IRENA says about two-thirds of renewable energy additions last year had lower costs than the world’s cheapest coal-fired power plants, providing further evidence that wind and solar continue to beat fossil fuels in cost.

“Renewables are by far the cheapest form of energy today,” said IRENA Director General Francesco La Camera.

“2022 is a stark example of the economic viability of new renewable energy generation.”

“Renewable energy frees economies from the volatility of fossil fuel prices and imports, lowers energy costs and improves market resilience – all the more so if the current energy crisis continues.”

IRENA has estimated that the more than 250 GW of new renewable energy projects commissioned in 2021 have avoided US$55 billion (A$82 billion) in additional fossil fuel costs due to surges. coal, gas and oil prices observed in 2022.

IRENA found that renewables were particularly competitive in European countries, where there was the largest price gap between wind and solar technologies and those using fossil fuels.

Source: IRENA.

While Australia has relatively cheaper access to coal and gas supplies – at least before the recent price spike – IRENA found Australia to be the third most competitive market for coal and gas. large-scale solar power, behind China and India, with some of the lowest solar markets. energy costs and achieved a massive 21% year-over-year cost reduction in 2021.

IRENA has estimated that the average levelized cost of utility-scale solar has fallen to $42 per MWh in Australia (AUD62/MWh), making it one of the cheapest sources of new solar generation. electricity in the world.

The Camera said that while governments may be looking to increase the additional supply of coal and gas to manage the current global energy crisis, long-term energy system planning must focus on growing alternative energy sources. cleaner.

“While a temporary crisis response may be necessary in the current situation, excuses to relax climate targets will not hold up in the medium to long term. The current situation is a devastating reminder that renewable energy and energy savings are the future,” said La Camera.

“With COP27 in Egypt and COP28 in the United Arab Emirates, renewable energy is providing governments with affordable energy to align with net zero and turn their climate promises into concrete actions with real benefits for people on the ground” , he added.

IRENA finds that while supply constraints and rising commodity prices may result in higher costs of renewable energy technologies, extremely high fossil fuel prices will “deeply deteriorate” the competitiveness of fossil fuels by compared to wind and solar.

“With regard to supply chains, IRENA data suggests that not all increases in material costs have yet been passed on to equipment prices and project costs,” IRENA says.

“If material costs remain high, price pressures in 2022 will be more pronounced. The increases, however, could be overshadowed by overall gains from cost-competitive renewables with higher fossil fuel prices.

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