While renewable energy cost can be hard to estimate, University of Oxford’s Institute of New Economic Thinking found that renewables likely cost less than previously thought. A new report found that predicted costs for renewables have likely been overestimated “falling short of early pricing model predictions again and again.”
According to the World Economic Forum, “renewable price forecasts didn’t account for infrastructure cost improvements,” and, while the early pricing models estimated that solar power prices to decline around 6 percent each year from 2010 to 2020, actual costs dropped 15 percent each year.
“In response to our opening question, ‘Is there a path forward that can get us there cheaply and quickly?’ our answer is an emphatic ‘Yes!’” the authors said. “The key is to maintain the current high growth rates of rapidly progressing clean energy technologies for the next decade. This is required to build up the industrial capabilities and technical know-how necessary to produce, install and operate these technologies at scale as fast as possible so that we can profit from the resulting cost reductions sooner rather than later.”
This point is important because, while the initial investments of renewable energies is potentially the deciding factor to switch from fossil fuels, renewable energy prices aren’t as high as anticipated and will continue to drop as the technology improves. According to the report, between 2010 and 2019 “solar electricity prices decreased from $378 per MWh to $68 per MWh,” and “onshore wind costs decreased by 40 percent, and offshore wind costs decreased by 29 percent.”