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Can rapidly declining renewable energy costs continue after 2025?

16 Jun 17:00 by Green Energy

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If the major barrier to a widespread switch from fossil fuels to renewable energy has largely been high upfront costs, then that barrier now appears to be crumbling.

Earlier this month, 11 major energy firms signed a declaration that offshore wind energy could be cost-competitive with coal and gas power by 2025. The statement - announced alongside an EU deal for greater co-operation to promote clean energy by North Seas countries - came ahead of a detailed Bloomberg New Energy Finance analysis this week forecasting a sharp decline in the cost of renewables over the next 10 years, with peak fossil fuel power now predicted for 2025.

Predictions of falling costs follow a record year for renewables in 2015, which saw around 149GW of additional renewable power installed globally, meaning that during every year since 2011 renewables have accounted for more than half of total new capacity coming on stream. Meanwhile, in many parts of the world renewables - especially biomass, hydropower, geothermal and onshore wind - are already cost competitive with fossil fuel alternatives.

In this context, it may not be wholly surprising to hear today's new analysis by the International Renewable Energy Agency (IRENA) draws some of the same conclusions on renewables cost reductions as BNEF and other experts, although the organisation also goes further by predicting solar and wind electricity cost reductions will continue well beyond 2025.