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Renewables vs. Fossil Fuels: Guess Who’s Winning the Cost Battle?

The world is racing toward renewable energy, but are we keeping up, Alberta?"

The news has been filled with stories about the hard times we’re living in. The staples we need to survive are getting expensive. We’re being gouged at the supermarket, gas station, and drug store and – if we’re not lucky enough to own our own home – by landlords.

But there is some good news about a necessity getting cheaper electricity prices dropping. Unfortunately, it’s in the rest of the world.

The global transition towards renewable energy has gained significant momentum recently, with wind and solar power leading the charge. 

A report from RenewEconomy highlighted that wind and solar energy saved a staggering $810 billion in electricity costs worldwide in 2022. 

That’s a lot of reduced electricity bills!

This big shift towards renewable energy has been labelled a “turning point” by the International Renewable Energy Agency (IRENA). 

The report split their findings into two groups.

  • Organization for Economic Co-operation and Development (OECD) countries which are are wealthier, use much primary energy per capita, and comprise 37 democracies with market-based economies.
  • Non-OECD are often called developing or emerging economies that do not belong to the OECD.

The data reveals that these renewable sources reduced the electricity sector’s fossil fuel bill by $520 billion in 2022 alone. 

Furthermore, the savings in non-OECD countries over the lifetime of new renewable energy installations in 2022 could further reduce costs by an additional $580 billion. That’s a lot of money in countries that have low family incomes.

The savings to non-OECD countries translated to substantial economic benefits from low electricity costs to reduced CO2 emissions and local air pollutants.

Less pollution means longer life expectancies and a higher quality of life

Global share of electricity produced by source. Energy Institute | RMI

Renewables Have Become More Competitive

Over the past two decades, the increased use of wind and solar worldwide has softened the economic impact of high fossil fuel prices.

Francesco La Camera, IRENA’s director-general, emphasized the cost-competitiveness of renewables, which has remained strong despite global inflation.

He noted that regions most affected by the fossil fuel price shock have remained resilient, mainly due to the significant increase in solar and wind energy over the past decade.

Another report from Canary Media underscores the uninterrupted trend in the decline in renewable energy costs. 

That report suggests that ongoing solar and wind technology improvements will further drive down costs, making them even more competitive against fossil fuels.

 By 2030, technological advancements could reduce current prices by a quarter for wind and half for solar. 

This trend is supported by a recent report from the clean energy think tank RMI, stating that renewable energy already outcompetes fossil fuels in terms of cost on a global scale. 

The gap is only expected to widen, with 62% of global energy investments projected to flow into clean energy technologies this year.

Renewables currently beat fossil fuels on cost with continued lower future costs. The graph shows a power plant’s lifetime cost divided by its energy production in $/MWh. Source RMI

The International Energy Agency estimates global clean energy capacity will surge from 107 gigawatts to over 440 gigawatts this year, marking its most significant increase ever. 

The Alberta (Dis)Advantage – Can We Keep Pace with Renewable Energy?

Kingsmill Bond, an energy strategist at RMI, describes the current era as an “energy technology revolution.” 

He points out that the data clearly shows the shift, but the renewable shift often gets overshadowed by hype about the challenges of moving away from fossil fuels. If you want to see this in action, Google Premier Smith’s recent statements about her renewables moratorium.

As more solar panels and turbines are produced, innovations lead to better, faster, and cheaper production methods. 

Over the past 40 years, solar and wind products have consistently decreased in price, whereas fossil fuel prices have spiked up and down while trending upward.

The global shift towards renewable energy is not just an environmental imperative but also an economic one. 

The continuous decline in wind and solar energy costs and their increasing efficiency and capacity make them a viable and sustainable supplement and alternative to fossil fuels. 

So, if we want not only to keep up with the rest of the world but once again become a global energy leader, the questions we need to answer remain:

  • Are we looking backward while the rest of the world moves ahead?
  • Is now the right time for Alberta to place a moratorium on the approval of renewables?
  • Will we suffer from reduced investment and higher electricity prices in our energy future?

Over the next few years, we’ll find out if there is still such a thing as the Alberta Advantage.

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