Solar and wind energy technologies in combination with energy storage systems are now more competitive in terms of price than conventional electricity production using fossil fuels, according to an IRENA report.

Renewable energy production systems, along with energy storage facilities, can produce electricity at the same price or sometimes even cheaper than electricity produced from coal and gas-based generation units.

The report says that the cost of electricity from solar generation in combination with batteries can be as low as $54 to $82 per megawatt-hour in regions rich in renewable energy sources. On the other hand, the cost of electricity produced from coal-fired plants in China is between $70 and $85 per megawatt-hour, while electricity generated from natural gas plants in certain regions costs above $100 per megawatt-hour.

The decline in costs is attributed to declining battery costs and falling production costs for renewable energies. Falling battery costs are associated with an increase in production, technology development, and supply chains. For example, the world leader in producing batteries is China.

As per IRENA, a combination of solar, wind, and battery storage would be able to deal with the issue of variability of renewable energy sources. The battery storage system could store electricity that is generated from either solar or wind energy during high production times and discharge the electricity at low times of generation.

This study is part of a continuous investment that is happening globally in terms of energy storage technologies and renewable energy projects. Several countries across Europe, the US, and Asia are increasingly adopting battery storage facilities amid the development of renewable energy such as solar and wind energy.

However, there has been strain placed on the electrical grid systems due to increased use of renewable energy. For example, the increase in solar energy generation in Europe led to excess electricity generation during the day, which created cases of negative prices in some energy marketplaces.

Moreover, the rapid development of energy consumption industries, including artificial intelligence and data centers, is creating a need for long-duration energy storage systems.

Earlier IRENA estimates had indicated that a majority of newly commissioned renewable energy projects globally were already cheaper than fossil fuel-based alternatives.