The cost of renewable energy sources is undercutting that of new and some existing coal-fired power plants, a report by the International Renewable Energy Agency (IRENA) showed on Tuesday.
Due to cheaper renewable energy, up to 800 gigawatts (GW) of existing coal-fired capacity could be replaced by new renewables capacity, which would save up to $32 billion a year and reduce carbon dioxide emissions by up to 3 gigatonnes.
"As costs for solar photovoltaic (PV) and onshore wind have fallen, new renewable capacity is not only increasingly cheaper than new fossil fuel-fired capacity, but increasingly undercuts the operating costs alone of existing coal-fired power plants," IRENA said in its annual renewable power generation costs report.
Phasing out coal burning is seen as key to meeting a Paris Agreement commitment to curb the global average temperature rise to below 2 degrees Celsius this century. The IEA forecast global coal demand would fall by about 8% in 2020.
Last year the global weighted-average levelised cost of electricity (LCOE) from new capacity additions of onshore wind fell by 13% compared to 2019, while the LCOE of offshore wind dropped by 9% and utility-scale solar PV by 7%, the report showed.
The LCOE comprises the cost of generating a megawatt hour of electricity, plus the upfront capital and development cost, financing costs, and operating and maintenance fees.
Between 2010 and 2020, the LCOE of utility-scale solar PV for new projects fell by as much as 85%, while onshore wind was down 56% and offshore wind fell 48%.
In Europe new coal-fired power plant operating costs are well above the costs of new solar PV and onshore wind, including the cost of carbon prices.
In the United States and India, operating costs for new coal plants are lower than renewables because there is no significant price on carbon emissions.
However in the United States between 77% and 91% of existing coal-fired capacity has operating costs estimated to be above the cost of new solar or wind power capacity, while in India, the figure is between 87% and 91%, the report said.
(Reporting by Nina Chestney; Editing by Jan Harvey)