Renewables, including hydropower, remain competitive despite fossil fuel prices returning closer to historical cost levels, according to a new report.
The report, Renewable Power Generation Costs in 2023, was released by the International Renewable Energy Agency (IRENA) at the Global Renewables Summit during the UN General Assembly in New York. Of the record 473 GW added in 2023, 81% (or 382 GW) of newly commissioned, utility-scale renewable projects had lower costs than their fossil fuel-fired alternatives.
“Renewable power remains cost-competitive vis-à-vis fossil fuels. The virtuous cycle of long-term support policies has accelerated renewables,” said IRENA’s Director-General Francesco La Camera. “In return, growth has led to technology improvements and cost reductions. Prices for renewables are no excuse anymore, on the contrary. The record growth of renewables in 2023 exemplifies this. Low-cost renewables represent a key incentive to significantly increase ambition and triple renewable power capacity by 2030, as modelled by IRENA and set by the UAE Consensus at COP28.”
Achieving the tripling renewables target requires global renewable capacity to reach 11.2 TW by 2030, adding an average of 1,044 GW of new capacity annually through 2030.
Hydropower highlights
The global weighted average levelized cost of electricity (LCOE) of newly-commissioned hydropower projects was US$0.057/kWh in 2023 – 7% lower than the $0.061/kWh recorded in 2022 and 33% higher than the projects commissioned in 2010.
In 2023, 100% of the newly-deployed capacity of hydropower projects commissioned that year had an LCOE lower than the country- or region-specific weighted average cost of newly commissioned fossil-fuel fired capacity, according to the report. The increase in LCOE since 2010 has been driven by rising installed costs, notably in Asia. The report notes this was likely due to an increase in projects in locations with more challenging site conditions and more recent supply chain inflation, which drove up costs.
In 2023, the global weighted average total installed cost of newly-commissioned hydro projects decreased to $2,806/kW. This was lower than the 2022 figure of $3,053/kW. The global weighted average total installed cost of hydropower in 2023 decreased after achieving its highest recorded value in 2022. This reduction was primarily attributed to differences in site locations for deployments between the two years. In 2022, there were a number of large projects, notably in Canada and the Lao People’s Democratic Republic, with large cost overruns.
Between 2010 and 2023, the global weighted average capacity factor for hydropower projects commissioned varied between a low of 44% in 2010 to 2011 and a high of 53% in 2023.
Read the full report here.
