Report on the Economic Viability of Renewable Energy and its Contribution to Sustainable Development Goals

Introduction: IRENA Report Findings

A report from the International Renewable Energy Agency (IRENA), titled “Renewable Power Generation Costs in 2024,” indicates a significant economic advantage for renewable energy sources over fossil fuels. The findings underscore the critical role of renewables in achieving global sustainability targets, particularly those related to energy, climate, and economic development.

• The report establishes that 91% of new renewable energy capacity added in the past year was more cost-effective than the cheapest fossil fuel alternatives.
• This trend is attributed to technological innovation, competitive supply chains, and economies of scale, directly supporting SDG 9 (Industry, Innovation, and Infrastructure).
• The continued cost-competitiveness of renewables is fundamental to advancing SDG 7 (Affordable and Clean Energy) on a global scale.

Detailed Cost Analysis and Economic Impact

Comparative Cost-Effectiveness

The report provides specific data on the cost advantages of key renewable technologies, demonstrating their economic feasibility.

• Onshore Wind: Projects were, on average, 53% cheaper than the lowest-cost fossil fuel equivalent, with an average cost of $0.034 per kilowatt-hour.
• Solar Photovoltaics (PV): Projects were 41% cheaper, averaging $0.043 per kilowatt-hour.

Contribution to Economic and Climate Goals

The expansion of renewable capacity has yielded substantial economic and environmental benefits, aligning with multiple Sustainable Development Goals.

• A total of 582 gigawatts of new renewable capacity was installed in 2024.
• This expansion resulted in a reduction of fossil fuel expenditure by approximately $57 billion, contributing to SDG 8 (Decent Work and Economic Growth) by promoting smart economics and redirecting capital.
• By displacing fossil fuels, this growth is a cornerstone of global efforts to meet SDG 13 (Climate Action), mitigating the impacts of climate change.

Challenges to the Global Energy Transition and SDG Attainment

Global and Regional Obstacles

Despite positive momentum, the report identifies several short-term challenges that could impede the pace of the energy transition and the achievement of related SDGs.

1. Geopolitical shifts and trade tariffs threaten to disrupt supply chains.
2. Bottlenecks in the supply of raw materials could slow deployment.
3. Rising costs associated with project development and essential support infrastructure are impacting progress, particularly in Europe and North America.

Financing Disparities and SDG 10

A significant barrier to a just and equitable transition is the disparity in financing costs. The report notes that nations in the Global South face disproportionately high capital costs, which hinders their ability to invest in renewable infrastructure. This challenge directly impacts the progress of SDG 10 (Reduced Inequalities) by creating an uneven playing field for clean energy development.

Strategic Recommendations for Accelerating Progress

Fostering International Cooperation for SDG 17

To safeguard the gains of the energy transition and ensure its continued momentum, the report calls for concerted international action. These recommendations are crucial for realizing SDG 17 (Partnerships for the Goals).

1. Reinforce International Cooperation: Strengthen global partnerships to overcome shared challenges.
2. Secure Resilient Supply Chains: Promote open and stable supply chains for renewable technologies and materials.
3. Create Stable Frameworks: Establish reliable policy and investment environments to build confidence and unlock finance, with a particular focus on supporting the Global South.

As noted by UN Secretary-General António Guterres, “Renewables are lighting the way to a world of affordable, abundant, and secure power for all.” Achieving this vision depends on collective action to dismantle barriers and ensure the pace and fairness of the transition.

Analysis of SDGs in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

1. SDG 7: Affordable and Clean Energy
   • The entire article is centered on this goal. It discusses the cost-competitiveness of renewable energy (solar, wind) against fossil fuels, the addition of new renewable capacity, and the aim to provide “affordable, abundant, and secure power for all.”
2. SDG 13: Climate Action
   • By highlighting the shift from fossil fuels to renewables, the article directly addresses a core strategy for climate change mitigation. The reduction in fossil fuel expenditure implies a reduction in greenhouse gas emissions.
3. SDG 9: Industry, Innovation, and Infrastructure
   • The article credits the cost reduction in renewables to “technological innovation, competitive supply chains and economies of scale.” It also mentions the need for investment in “support infrastructure” to facilitate the energy transition.
4. SDG 8: Decent Work and Economic Growth
   • The report frames the transition to clean energy as “smart economics.” The stated reduction of fossil fuel expenditure by “$57 billion” demonstrates a positive economic impact and a decoupling of economic activity from environmental degradation.
5. SDG 10: Reduced Inequalities
   • The article points out that the “Global South continues to face disproportionately high financing costs,” highlighting a key inequality that hinders a globally just energy transition. Addressing this is crucial for ensuring fairness.
6. SDG 17: Partnerships for the Goals
   • The article concludes with a call for “international cooperation,” “open and resilient supply chains,” and “stable policy and investment frameworks” to overcome challenges, which directly aligns with the spirit of global partnership for sustainable development.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. Target 7.1: By 2030, ensure universal access to affordable, reliable and modern energy services.
   • This is supported by the UN Secretary-General’s comment about renewables lighting the way to “a world of affordable, abundant, and secure power for all.” The fact that 91% of new renewable projects are cheaper than fossil fuels makes energy more affordable.
2. Target 7.2: By 2030, increase substantially the share of renewable energy in the global energy mix.
   • The article explicitly states that “582 gigawatts of renewable capacity were added in 2024,” which is a direct contribution to this target.
3. Target 7.a: By 2030, enhance international cooperation to facilitate access to clean energy research and technology… and promote investment in energy infrastructure and clean energy technology.
   • This is referenced in the call to “unleash finance and investment” and address the “disproportionately high financing costs” in the Global South, which requires international cooperation and investment frameworks.
4. Target 13.2: Integrate climate change measures into national policies, strategies and planning.
   • The article notes that the progress in renewables is a result of “years of innovation, policy direction, and growing markets,” implying that policy decisions (climate change measures) are driving the transition away from fossil fuels.
5. Target 9.4: By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies.
   • The article’s focus on new renewable projects like onshore wind and solar photovoltaics, driven by “technological innovation,” directly relates to the adoption of clean technologies.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

1. Cost of electricity per kilowatt-hour: The article provides specific cost data that can be used as an indicator for affordability (Target 7.1).
   • Onshore wind cost: “$0.034 per kilowatt-hour.”
   • Solar photovoltaics cost: “$0.043 per kilowatt-hour.”
2. Annual renewable capacity additions: This is a direct indicator for measuring the increase in the share of renewable energy (Target 7.2).
   • The article states, “582 gigawatts of renewable capacity were added in 2024.”
3. Cost-competitiveness of renewables: The percentage of new renewable projects that are cheaper than fossil fuels serves as a powerful indicator of the economic viability and scalability of clean energy.
   • The report finds that “91% of new renewable energy projects are cheaper than the lowest-cost fossil fuel equivalents.”
4. Financial savings from avoiding fossil fuels: This can be used as an economic indicator for decoupling growth from environmental harm (Target 8.4).
   • The added renewable capacity in 2024 is noted to have reduced “fossil fuel expenditure by around $57 billion.”
5. Disparity in financing costs: While not quantified, the mention of “disproportionately high financing costs” in the Global South serves as a qualitative indicator for inequality in the energy transition (Target 10).

4. Summary Table of SDGs, Targets, and Indicators

Source: sustainabilityonline.net