Falling clean energy costs can provide opportunity to boost climate action in COVID-19 recovery packages

As COVID-19 hits the fossil fuel industry, a new report shows that renewable energy is more cost-effective than ever – providing an opportunity to prioritize clean energy in economic recovery packages and bring the world closer to meeting the goals of the Paris Agreement.

Global Trends in Renewable Energy Investment 2020 — from the UN Environment Programme (UNEP), the Frankfurt School-UNEP Collaborating Centre and BloombergNEF (BNEF), analyzes 2019 investment trends, and clean energy commitments made by countries and corporations for the next decade.

It finds commitments equivalent to 826 GW of new non-hydro renewable power capacity, at a likely cost of around USD 1 trillion, by 2030. (1GW is similar to the capacity of a nuclear reactor). Getting on track to limiting global temperature rise to under 2 degrees Celsius – the main goal of the Paris Agreement – would require the addition of around 3,000GW by 2030, the exact amount depending on the technology mix chosen. The planned investments also fall far below the USD 2.7 trillion committed to renewables during the last decade.

However, the report shows that the cost of installing renewable energy has hit new lows, meaning future investments will deliver far more capacity. Renewable energy capacity, excluding large hydro-electric dams of more than 50 MW, grew by 184 GW in 2019. This highest-ever annual addition was 20 GW, or 12 percent, more than the new capacity commissioned in 2018. Yet the dollar investment in 2019 was just 1 per cent higher than the previous year, at USD 282.2 billion.

The all-in, or levelized, cost of electricity continues to fall for wind and solar, thanks to technology improvements, economies of scale and fierce competition in auctions. Costs for electricity from new solar photovoltaic plants in the second half of 2019 were 83 per cent lower than a decade earlier.

Renewable energy has been eating away at fossil fuels’ dominant share of electricity generation over the last decade. Nearly 78 per cent of the net new GW of generating capacity added globally in 2019 was in wind, solar, biomass and waste, geothermal and small hydro. Investment in renewables, excluding large hydro, was more than three times that in new fossil fuel plants.

2019 marked many other records, the report finds:

  • The highest solar power capacity additions in one year, at 118 GW.
  • The highest investment in offshore wind in one year, at USD 29.9 billion, up 19 per cent year-on-year.
  • The largest financing ever for a solar project, at USD 4.3 billion for Al Maktoum IV in the United Arab Emirates.
  • The highest volume of renewable energy corporate power purchase agreements, at 19.5GW worldwide.
  • The highest capacity awarded in renewable energy auctions, at 78.5GW worldwide.
  • The highest renewables investment ever in developing economies other than China and India, at USD 59.5 billion.
  • A broadening investment, with a record 21 countries and territories investing more than USD 2 billion in renewables.

The 2019 investment brought the share of renewables, excluding large hydro, in global generation to 13.4 per cent, up from 12.4 per cent in 2018 and 5.9 per cent in 2009. This means that in 2019, renewable power plants prevented the emission of an estimated 2.1 Gt of carbon dioxide, a substantial saving given global power sector emissions of approximately 13.5 Gt in 2019.