Every year, the International Energy Agency – a Paris-based intergovernmental organization – releases its World Energy Outlook (WEO), a massive analysis of the year’s energy data and projections for the future.
The 2020 WEO brought with it an extraordinary finding: solar power is now the cheapest electricity in the history of humankind.
In the best locations and complemented by supportive policy and finance options, solar can cost at or below $20 per megawatt-hour (MWh). On average, it costs somewhere between $30-60/MWh in Europe and the United States and between $20-40/MWh in China and India. According to the IEA, these costs are up to 50% less than previously believed and are now well below that for new coal plants and other fossil-based sources.
Altogether that is very good news for the future of renewable energy. With such low costs (getting cheaper by the year), there becomes not only an ethical imperative to transition but increasingly an overwhelming economic case. The economic case is bolstered further by IEA’s projections that the riskiness of solar investments is decreasing. Because of this, their “cost of capital” – the return on investment investors must see to make such projects worth their while – is now also well below that of fossil fuel plants.
Because of this, the IEA’s projections for global solar output are more than 40% greater than they were even just two years ago in 2018. Wind and solar together have already overtaken nuclear in total global output and are on track to overtake hydropower before 2025, gas by 2030, and coal perhaps by 2035.
The rise of renewables to our top global energy source now appears inevitable. What can we do to accelerate this process even further and make sure that next year’s WEO paints an even rosier picture?