Renewables now cheaper than fossil fuels, but Bangladesh lags behind: IRENA

Renewable energy has become significantly more cost-effective than fossil fuels worldwide, according to the latest report by the International Renewable Energy Agency (IRENA), released on Wednesday, 23 July.

The report, titled Renewable Power Generation Costs in 2024, found that 91% of all renewable power projects commissioned worldwide in 2024 generated electricity at a lower cost than any fossil fuel-based alternative.

However, IRENA cautioned that this progress is under threat in developing and capital-constrained countries such as Bangladesh.

Shafiqul Alam, lead energy analyst for Bangladesh at the Institute for Energy Economics and Financial Analysis (IEEFA), said, "Like many other countries, the cost of renewable energy is falling in Bangladesh too. However, the pace of decline is relatively slower. This is mainly due to high land prices, complex acquisition processes, and transmission costs."

He added that before the suspension of the Special Power Act, 2010, the most recent tariff for utility-scale solar power in Bangladesh stood at $0.0985 per kilowatt-hour. "If government land can be allocated and transmission costs managed through competitive bidding, the cost could fall further. Special economic zones could also be used to implement utility-scale solar projects," he noted.

According to IRENA, global renewable power capacity increased by 582 gigawatts in 2024, helping to avoid approximately $57 billion in fossil fuel spending. Onshore wind emerged as the cheapest renewable energy source at $0.034 per kilowatt-hour, followed by solar photovoltaic at $0.043.

Despite this progress, IRENA warned that weak grid infrastructure, high capital costs, limited access to financing, policy uncertainty, and bureaucratic delays continue to hinder renewable energy deployment in the Global South—particularly in Asia, Africa, and Latin America.

"In Bangladesh, investor reluctance in recent tenders signals a lack of confidence. Restoring implementation agreements in tenders could be an effective step toward rebuilding trust," said Shafiqul Alam.

The IRENA report notes that in developing countries, a large portion of project costs is derived from interest payments and financing expenses, which significantly increase the final cost of electricity. For example, while average wind power generation costs are similar in Europe and Africa, financing remains the dominant cost driver in African projects.

UN Secretary-General António Guterres commented: "Clean energy is now smart economics. But unless grid development, administrative reform, and financing are ensured, the renewable revolution will leave developing countries behind."

IRENA Director-General Francesco La Camera added: "Renewable energy projects in 2024 helped avoid around $467 billion in fossil fuel costs. But to sustain this success, urgent investments in finance, policy, and infrastructure are needed across the Global South."

The report also highlights that battery storage costs have fallen by 93% since 2010, significantly improving the reliability and flexibility of renewable power systems.

Bangladesh has set a target of generating 3,000 megawatts of rooftop solar power by 2025. However, Shafiqul Alam cautioned that faster on-ground implementation is crucial to attract investor confidence and secure a sustainable energy future.