IRENA: Procurement's Role in the Shift to Renewables
The renewable energy sector in 2024 showcased exceptional growth, as detailed in the International Renewable Energy Agency’s (IRENA) Renewable Power Generation Costs in 2024 (RPGC) report.
As global procurement strategies shift towards low-carbon power alternatives, renewables are becoming not only environmentally pivotal but also economically preferable to fossil fuels.
Technological advances, competitive supply chains and scaling effects have enabled a widespread deployment, underscoring a major shift for the procurement sector.
Record-breaking capacity growth
Global renewable power capacity in 2024 experienced an increase of 582 GW, marking a significant 19.8% rise over the previous year and asserting a new landmark.
The surge was primarily fuelled by the rapid expansion of solar photovoltaic (PV) and onshore wind, driven by efficient supply chains and robust policy frameworks, as highlighted by IRENA data.
These updates see variable renewable technologies such as solar and wind leading the charge in new capacity additions.
“The global energy system is undergoing a profound transformation, with renewables accounting for an increasing share of power generation,” says Francesco La Camera, Director-General of IRENA, within its RPGC report.
“In 2024 alone, renewables avoided an estimated US$467bn in fossil fuel costs, demonstrating their cost-efficiency and strategic value for energy security and economic stability.”
He cautioned of ongoing risks, like geopolitical tensions and trade barriers, pose potential challenges to continued cost reductions.
Renewables as a cost-competitive option
The levelised cost of electricity (LCOE) analysis identifies renewables as the most cost-effective option for new electricity in 2024, with 91% of new utility-scale capacity yielding power cheaper than the newest fossil fuel-based alternatives.
The cost-effectiveness of procuring renewable energy becomes evident with utility-scale onshore wind achieving the lowest LCOE at US$0.034/kWh, followed by solar PV at US$0.043/kWh and hydropower at US$0.057/kWh.
Between 2010 and 2024, costs fell to US$691/kW for solar PV, US$1,041/kW for onshore wind and US$2,852/kW for offshore wind, emphasising the procurement sector's improved affordability for renewable integration.
Technology cost trends
There have been some increases in the LCOE for certain technologies compared to 2023:
- Solar PV increased by 0.6%
- Onshore wind increased by 3%
- Offshore wind increased by 4%
- Bioenergy increased by 13%
However, decreased costs are noted in:
- Concentrated solar power (CSP) by 46%
- Geothermal by 16%
- Hydropower by 2%
The procurement aspect further benefits from the significant decline in battery storage costs, which fell by 93% from 2010 to 2024, to US$192/kWh from US$2,571/kWh.
Regional variations in procurement costs
Cost competitiveness exhibits regional diversity, particularly regarding onshore wind in China (US$0.029/kWh) and Brazil (US$0.030/kWh), both recording LCOEs below the global average.
Solar PV also follows a similar trend, with China (US$0.033/kWh) and India (US$0.038/kWh) reporting below-average costs. Offshore wind procurement prices averaged at US$0.078/kWh in Asia, slightly less than Europe’s US$0.080/kWh.
By 2029, the Global Total Installed Costs (TIC) are projected to further decrease to US$388/kW for solar PV, US$861/kW for onshore wind and US$2,316/kW for offshore wind.
These long-term cost reductions will be bolstered by ongoing technological advancements and matured supply chains. Nonetheless, IRENA warns that short-term cost increases could arise from geopolitical risks, particularly trade tariffs on renewable components and bottlenecks within supply chains.