In a key new report entitled ‘24 / 7 Renewables: the economics of firm solar and wind’, the International Renewable Energy Agency (IRENA) says that hybrid renewables plus battery systems can deliver firm power at lower costs than fossil fuels when combined to provide ‘round-the-clock’ electricity supply. For example, it says the costs of ‘firm levelised supply’ for solar projects combined with storage now range from $54-82 per megawatt-hour (MWh) in most regions, compared to $70–85 per MWh for new coal in China and $100 per MWh for new gas globally.
The IRENA report comes at a time when the conventional metric for comparing power cost, the Levelised Cost of Energy (LCOE), has come under attack for ignoring the full cost of using variable renewables. For example, the LSE Grantham Institute says LCOE doesn’t measure the full system costs of balancing variable renewable and some see this as undermining the case for renewables.
IRENA accepts that ‘plant level metrics such as LCOE must … be complemented by system level analyses - accounting for the costs of flexibility and reliability and the value of resource diversity - and by macroeconomic impact assessments that quantify the broader benefits to society’. But it says that, with the right technology mix, plant-based approaches can still be useful and indeed can deliver firm power.
Setting the scene, IRENA notes that ‘as the share of variable renewables increases, two challenges emerge. The first is physical: ensuring that power is available when and where it is needed. While system operators have become increasingly adept at managing real-time balancing, grid connection constraints are emerging as a binding limitation. The second challenge is economic: high renewable shares depress wholesale prices during periods of peak generation, eroding the revenues - and the business case - for project developers’.
In response it says, ‘a new generation of hybrid assets combining solar PV, wind and battery energy storage systems (BESS) is taking shape. These systems enable more generation capacity to connect through existing grid infrastructure, shift output to higher-value hours, improve capture rates12 and deliver reliable, round-the-clock renewable electricity.’
The result it says is that ‘in high-quality resource regions, co-located solar PV, onshore wind and BESS can already deliver reliable, round-the-clock electricity at costs competitive with – and in many cases below – those of new fossil fuel generation’. This it claims ‘represents a fundamental shift in what renewable electricity can deliver and the price at which it can be delivered’.
However, it adds that firm solar and wind is ‘only one of several pathways to reliable power systems. High shares of variable renewables can be integrated without requiring every generator to be firm, provided that sufficient flexibility exists across transmission networks, storage, demand response and complementary dispatchable capacity.’ But it says that ‘project-level firming is most relevant where grid access is constrained, where customers require a continuous, firm supply, or where new capacity is needed rapidly and conventional alternatives face extended lead times.’
Overall then its an important new development. Although it says ‘a system-wide approach remains essential for planning reliable, low-carbon power systems and assessing the flexibility needed for higher shares of renewables,’ it notes that ‘the complexity and data intensity of large-scale models often make them practically inaccessible to investors, developers and policy makers as they seek clear, replicable benchmarks’, and so ‘a growing body of work is adopting simpler, project-level approaches to quantify the economics of hybrid renewable assets’. And it says this report builds on these developments, introducing ‘a transparent and replicable framework to assess the economics of firm renewable electricity at the project level,’ indicating what it actually costs to deliver ‘firm, round-the-clock electricity from a hybrid renewable system at a given site, under realistic technology and financing assumptions’. It claims that it is ‘a consistent, globally comparable benchmark: the firm levelised cost of electricity.’
Sounds useful...and the results for hybrid wind, solar and battery systems look impressive - as trade journal Edie reported. Although the local outcomes were site specific, IRENA had found that the average costs of solar-plus-battery configurations across a range of countries had fallen from over $100 per MWh in 2020 to $54-82 per MWh. And costs were expected to reduce by a further 30% by 2030 and 40% by 2035. This would bring costs below $50 per MWh for the best-performing sites. Even in the often cloudy UK, consumers are now it seem buying in to PV solar plus battery storage as costs fall, this, reportedly, helping to cut their bills.
As for wind, IRENA estimates for 2025 show that firm wind-plus-storage costs ranged from around $59 per MWh in Inner Mongolia to around USD 88-94 per MWh across Brazil, Germany, and Australia. IRENA predicts costs to reach as low as $49-75 per MWh in these markets by 2030.
All in all, it does seem that variability needn’t be the big issue it is sometimes portrayed as. Cheap storage and cheap renewables can help reduce system costs, with, for example, IRENA noting that the rise of 24/7 firm power can helped reduce the impact (and curtailment costs) of grid constraints. It also notes that renewables plus storage makes it to provide the firm supply that AI needs. Though that opens up the question of how much AI we really need and also whether powering AI is the best use for green power…issues which are discussed in the forthcoming OUP paper that Terry Cook and I have written: see my last post. The accepted but uncorrected version is now online, the final thing should emerge in July.
*Meanwhile, this bit of post-UK local election analysis was interesting. Polling by More in Common for the Energy and Climate Intelligence Unit put Reform voters support for on shore wind at 56%, 66% for offshore wind and 59% for solar. Only 12% of Reform voters said reversing emissions reduction policies was a key reason for supporting the party. Make of that what you will!
Certainly the green power approach was confirmed by the Kings Speech, on energy independence, which noted that ‘increased production of clean British energy will help to ensure that enemies of the UK cannot attack the economic security of the British people,’ even if that did include nuclear, the fuel for which is imported. Some of it still from Russia!
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