The world is witnessing a paradigm shift in energy production, and the International Renewable Energy Agency (IRENA) has just delivered a powerful blow to the fossil fuel industry with its latest report. The report, titled '24/7 Renewables: The Economics of Firm Solar and Wind', reveals that renewable energy sources, specifically solar and wind power combined with battery storage, are now cost-competitive, if not cheaper, than fossil fuels. This is a significant development, as it challenges the long-held belief that renewable energy is an expensive, unreliable alternative to traditional fossil fuels.
The report highlights that in prime solar and wind regions, hybrid solutions of solar and wind with battery storage can deliver round-the-clock power at lower costs than fossil fuels. For instance, the firm levelised costs of electricity (firm costs) for solar plus storage range from USD 54 to USD 82 per megawatt-hour (MWh) in high-quality resource regions, compared to USD 70-85 per MWh for new coal in China and over USD 100 per MWh for new gas globally. This is a remarkable achievement, especially considering the rapid decline in costs for solar PV, wind power, and battery storage since 2010.
One of the key advantages of 24/7 renewable power is its ability to optimize the use of constrained grid connections and shift electricity production to higher-value hours. This makes it particularly attractive for serving the most demanding electricity users, such as artificial intelligence (AI) and data centers, which require uninterrupted supply. Moreover, firm renewables enable the production of clean fuels for hard-to-abate sectors, where economic viability depends on both cost and the ability to operate at high utilization rates.
The IRENA report also emphasizes the rapid decline in construction timelines for renewable energy projects. Projects are typically built within one to two years of securing permits and grid connection, which is significantly faster than new gas-fired alternatives in most markets. This efficiency is a testament to the maturity and scalability of renewable energy technologies.
Looking ahead, the report projects further cost reductions across solar, wind, and battery storage technologies. As costs fall simultaneously, the combined effect on hybrid systems is already significant. IRENA's analysis of solar-plus-battery configurations shows that firm costs have fallen from above USD 100 per MWh in 2020 to around USD 54-82 per MWh by 2025 in high-irradiance solar regions and strong wind corridors. By 2030, further cost reductions of roughly 30% are projected, bringing firm costs below USD 50 per MWh at the best-performing sites.
The United Arab Emirates' Al Dhafra complex, which pairs solar PV with battery storage, is a practical example of the report's findings. It delivers a firm 1 gigawatt of clean electricity at around USD 70 per MWh, showcasing the potential for renewable energy to provide reliable, cost-effective power.
Furthermore, firm wind-plus-storage systems are also becoming increasingly competitive. IRENA's estimates for 2025 show that firm wind-plus-storage costs ranged from around USD 59 per MWh in Inner Mongolia to around USD 88-94 per MWh across Brazil, Germany, and Australia. By 2030, these costs are projected to fall to roughly USD 49-75 per MWh across these markets.
The report's comprehensive analysis of cost trends, cost drivers, and regional variations in hybrid, round-the-clock solar, wind, and storage systems provides a robust benchmark for evaluating and comparing the costs of round-the-clock renewable power. It also highlights the importance of continued technology learning, manufacturing scale, and supply chain integration in driving further cost reductions.
In conclusion, the IRENA report is a wake-up call for the fossil fuel industry and a testament to the rapid progress made in renewable energy technologies. As costs continue to decline and reliability improves, the transition to a renewable energy-dominated world becomes increasingly inevitable. This shift will not only benefit the environment but also create new economic opportunities and ensure a more sustainable future for generations to come.
