Solar power generation affects coal prices

On average, new solar photovoltaic (PV) and onshore wind power cost less than keeping many existing coal plants in operation, and auction results show this trend accelerating – reinforcing the case.

Next year, up to 1 200 gigawatts (GW) of existing coal capacity could cost more to operate than the cost of new utility-scale solar PV, the report shows. Replacing the costliest 500 GW of coal with solar PV and onshore wind next year would cut power system costs by up to USD 23 billion every year and reduce annual emissions by around 1.8 .

Over the forecast period, potential renewable electricity generation growth exceeds global demand growth, indicating a slow decline in coal-based generation while natural gas remains stable. In 2028, renewable energy sources account for 42% of global electricity generation, with the wind and solar PV share making up 25%.

Cost degression in photovoltaics, wind-power and battery storage has been faster than previously anticipated. In the future, climate policy to limit global warming to 1.5–2 °C will make carbon.

The strong increases in natural gas prices have prompted substantial switching to the use of coal rather than natural gas to generate electricity in key markets, including the United States, Europe and Asia. The increased use of coal is in turn is driving up CO2 emissions from electricity generation globally.

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6 FAQs about [Solar power generation affects coal prices]

Is coal more expensive than solar power?

In India, 141 GW of installed coal is more expensive than new renewable capacity. In Germany, no existing coal plant has lower operating costs than new solar PV or onshore wind capacity. Globally, over 800 GW of existing coal power costs more than new solar PV or onshore wind projects commissioned in 2021.

Can solar power be a competitive alternative to coal?

The economics of power generation are increasingly favoring renewable energy sources like solar. With diminishing costs and enhanced efficiency, solar power is emerging as a highly competitive alternative to coal.

Do new renewables cost more than existing coal plants?

IRENA’s report also shows that new renewables beat existing coal plants on operating costs too, stranding coal power as increasingly uneconomic. In the United States for example, 149 GW or 61 per cent of the total coal capacity costs more than new renewable capacity.

Why are gas and coal prices so high?

Gas, coal and electricity prices have in recent weeks risen to their highest levels in decades. These increases have been caused by a combination of factors, but it is inaccurate and misleading to lay the responsibility at the door of the clean energy transition.

Are renewables undercuting coal's operational costs?

Concentrating solar power (CSP) fell by 16 per cent, onshore wind by 13 per cent, offshore wind by 9 per cent and solar PV by 7 per cent. With costs at low levels, renewables increasingly undercut existing coal’s operational costs too.

Is new coal power a good idea?

The case for new and much of the existing coal power generation, is both environmentally and economically unjustifiable,” said Francesco La Camera, Director-General of IRENA. “Renewable energy is increasingly the cheapest source of new electricity, offering tremendous potential to stimulate the global economy and get people back to work.

Solar power generation affects coal prices