Is most renewable energy still more expensive than fossil fuels?

In 2020, nearly two-thirds (62%) of the renewable power-generation capacity added worldwide had lower electricity costs than the cheapest source of new fossil fuel-fired capacity, according to the International Renewable Energy Agency. “Today, renewables are the cheapest source of power,” said IRENA’s Director-General in June 2021.

Renewable energy costs declined considerably over the past two decades as technologies improved, more suppliers entered the market, and the industry benefited from economies of scale. Between 2010 and 2020, the cost of electricity from utility-scale solar sources fell by 85%.

The International Energy Agency's latest market update stated that while renewable electricity costs have increased due to rising freight and raw-material costs, fossil-fuel electricity costs "have risen at a much faster pace."

When factoring in the social costs of fossil fuels, renewables become even cheaper. A 2021 study found that a true accounting of the health and environmental impacts of fossil fuels "would make many fossil fuelled and nuclear power stations economically unviable." The Solutions Project estimated that a 100% renewable transition in the U.S. would save $742.38 billion and 62,676 lives lost to air pollution per year.