By Salifu Faridat
As the world grapple with skyrocketing fuel prices and growing concerns about energy sustainability, a groundbreaking report from the International Renewable Energy Agency (IRENA) has revealed that renewable power generation has achieved an astounding reduction of over $520 billion in the fuel expenses of the global electricity sector.
Titled “Renewable Power Generation Costs in 2022,” this report not only spotlights the monumental impact of renewable energy but also underscores how it has significantly lightened the financial load on the global electricity sector.
This remarkable feat owes its success to the substantial addition of new renewable capacity since the beginning of the 21st century. Notably, the benefits of these financial windfalls aren’t confined to a single year. Projections indicate that the new renewable capacity added in 2022 alone will pave the way for cost reductions of up to $580 billion, with the most significant impact felt in non-OECD countries. What’s even more impressive is that a staggering 86% of the renewable capacity commissioned in 2022 exhibited superior cost-effectiveness when compared to their fossil fuel-fired counterparts.
The reverberations of these cost-saving achievements aren’t confined to borders but resonate worldwide, with non-OECD nations experiencing a particularly pronounced impact.
The IRENA report casts an illuminating spotlight on the pivotal year of 2022, offering a comprehensive historical perspective on renewable power generation costs over the past two decades. Its findings serve as an urgent call to action, emphasizing the imperative need for sustained expansion of renewable capacity until 2030 to align with the world’s most pressing climate targets.
The significance of these cost savings transcends immediate financial advantages. Renewables have emerged as instrumental forces in the battle against climate change, effectively curbing CO2 emissions and mitigating the adverse effects of local air pollutants. During the tumultuous fuel price crisis of 2022, renewables played a pivotal role in buffering the global economy from more severe disruptions. Their impact extends beyond economics, aiding nations in transitioning away from fossil fuels, thus confronting both energy and climate crises head-on.
A closer examination of the report reveals a fascinating trend—the consistent improvement in the cost competitiveness of renewables over the past 13 to 15 years. Solar and wind power generation costs have witnessed remarkable declines, making them increasingly cost-competitive with fossil fuels, even without financial incentives. Notably, the cost of electricity generated from solar photovoltaic sources plummeted by a staggering 89%, while onshore wind costs witnessed a remarkable 69% reduction in 2022. These developments firmly position renewables as the economically prudent choice for energy generation. Moreover, the report offers a compelling prediction—persistently high fossil fuel prices will cement renewables’ status as the most economical source for new energy generation. In doing so, renewables enhance global energy security and provide a protective shield for consumers, insulating them from the volatility of fuel prices.
Across the globe, the escalating prices of fossil fuels in 2022 created an unprecedented opportunity for renewable energy, with over 187 gigawatts of newly commissioned renewable capacity proving more cost-effective than fossil fuel-fired electricity.
In the context of rising fuel prices, Nigeria spent approximately N7 trillion on premium motor spirit subsidies last year, compelling businesses relying on diesel to explore alternative energy sources, especially solar, to manage escalating energy bills. The removal of subsidies on PMS led to a fourfold increase in pump prices, driving households to embrace off-grid solutions, primarily batteries and solar.
IRENA, in its latest report titled “Renewable Power Generation Costs in 2022,” highlights that the global power sector saved fuel costs of $520 billion last year due to renewable energy. In non-OECD countries, the report predicts that the lifetime cost savings from new capacity additions in 2022 will reduce expenses by up to $580 billion. Additionally, these direct cost savings translate into substantial economic benefits, including the reduction of CO2 emissions and local air pollutants.
Despite the growing interest in alternative energy sources like solar, the upfront costs remain a significant concern and obstacle, particularly in a country with a high percentage of people living in various forms of multidimensional poverty. However, as the IRENA report illustrates, the transition to renewables is a financially prudent and environmentally responsible choice that holds the promise of a more sustainable energy future.