Almost two-thirds of the new renewable energy capacity installed last year can generate power less expensively than the cheapest fossil fuel option, according to the International Renewable Energy Agency (IRENA).

“Today, renewables are the cheapest source of power,” said IRENA Director-General Francesco La Camera. “Renewables present countries tied to coal with an economically attractive phaseout agenda that ensures they meet growing energy demand while saving costs, adding jobs, boosting growth, and meeting climate ambition.”

“The public debate around renewable energy continues to suffer from an outdated perception that renewable energy is not competitive, forming a significant and unnecessary barrier to its deployment,” IRENA adds in its latest annual review of renewable power generation costs. “Renewables are increasingly the most economic solution for new grid-connected capacity and, where oil-fired generation predominates, a lower-cost renewable solution almost always exists.”

Of the 261 gigawatts (that’s 261 billion watts) of green power capacity installed around the world last year, 162 GW had costs lower than coal or diesel, the report says. In emerging economies, the renewable electricity installed in 2020 will reduce annual power costs by US$6 billion compared to new fossil fuel generation, not including the benefits of significantly reducing greenhouse gas emissions.

Despite the current global pandemic, “there was no disruption to the trend in continued cost declines for solar and wind power,” the report states. From 2019 to 2020, the average costs of new capacity declined 16% for concentrating solar power (CSP), 13% for onshore wind, 9% for offshore wind, and 7% for utility-scale solar photovoltaics (PV).

Over the past decade, the cost to generate electricity from four renewable energy technologies has dropped significantly, although it has increased for two others. Solar PV fell 85% between 2010 and. 2020, from 38.1 to 5.7¢ per kilowatt-hour (kWh), with installation costs dropping 81% while panel capacity factors increased.

Costs fell 68% for CSP (from 34 to 10.8¢ per kWh), 56% for onshore wind (8.9 to 3.9¢), and 48% for offshore wind (16.2 to 8.4¢). Electricity from bioenergy held steady at 7.6¢/kWh. Hydropower increased 18%, from 3.8 to 4.4¢, while geothermal rose 45%.

IRENA placed global renewable energy capacity in 2020 at 2,799 GW, a 3.7-fold increase from 754 GW in 2000. The 261 GW of new capacity in 2020 compared with 176 GW added in 2019, with solar PV the largest contributor at 127 GW.