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RIYADH: Rapid adoption of clean technologies can increase energy affordability, according to a new report.

In its latest study, the International Energy Agency said a key task for governments around the world is to make clean energy technologies more accessible to those who might otherwise struggle with upfront costs.

The energy agency noted that additional investment in the sector is needed to meet net zero emissions targets by 2050.

“The report shows that getting the world on track to achieve net zero emissions by 2050 requires additional investment, but also reduces the operating costs of the global energy system by more than half over the next decade compared to a trajectory based on today’s policy arrangements. The net result is a more affordable and fairer energy system for consumers,” the energy think tank said.

Clean technologies are cost competitive

According to the IEA, clean energy technologies are already more cost-competitive over their lifetime than technologies based on conventional fuels such as coal, natural gas and oil, with photovoltaics and wind power being the cheapest power generation options.

“In 2023, more than 95 percent of new utility-scale solar PV and new onshore wind installations had lower generation costs than new coal and natural gas plants,” the energy agency said.

He added: “Solar module prices are currently exceptionally low – down 30 percent in 2023 – creating affordable opportunities for everything from utility-scale projects to home solar systems whose value is enhanced by cheaper batteries.”

The analysis showed that electric vehicles, although expensive compared to their traditional counterparts, will be profitable in the long run due to low maintenance costs.

“Even if electric vehicles, including two- and three-wheelers, have higher upfront costs, which is not always the case, they usually result in savings due to lower operating costs. “Energy-saving appliances such as air conditioners provide similar financial benefits over their lifetime,” the IEA noted.

Clean energy transition depends on upfront investment

The energy advisory panel further noted that the clean energy transition depends on unlocking higher levels of upfront investment, particularly in developing economies.

According to the report, clean energy investments in emerging economies are lagging due to real or perceived risks hampering new projects and access to finance.

“Moreover, distortions in the current global energy system in the form of fossil fuel subsidies favor incumbent fuels, hampering investment in the clean energy transition,” the IEA said.

It added: “Governments around the world collectively spent about $620 billion in 2023 to subsidize the use of fossil fuels – significantly more than the $70 billion that was spent to support consumer-directed clean energy investments.”

Benefits of clean energy technology for customers

According to the analysis, benefits from a faster energy transition and the growing share of renewable energy sources such as solar and wind power will help end customers because clean technologies are less volatile than the prices of petroleum products.

The IEA added that by 2035, electricity is expected to overtake oil as the main fuel source in terms of final consumption.

“The data clearly shows that the faster the transition to clean energy, the more profitable it will be for governments, businesses and households,” said Fatih Birol, executive director of the IEA.

He added: “If policymakers and industry leaders postpone action and spending today, we will all pay more tomorrow. The first-of-its-kind global analysis in our new report shows that the way to make energy more affordable for more people is to accelerate the transformation, not slow it down. But much more needs to be done to help poorer households, communities and countries gain a foothold in the new clean energy economy.”

Political intervention is key to accelerating the energy transformation

The Energy Agency further noted that incentives and greater support, mainly targeted at more disadvantaged households, could improve the uptake of clean energy technologies in the coming years.

According to the IEA, encouraging clean energy technologies will help consumers fully realize the benefits of these renewable energy sources and savings, and support efforts to meet international energy and climate goals.

The report suggests additional measures governments can take to accelerate the adoption of clean technologies, including implementing energy efficiency retrofit programs for low-income households, requiring utilities to finance more efficient heating and cooling packages, and providing affordable green options transport.

“Policy intervention will be crucial to address the serious inequalities that already exist in the current energy system, where affordable and sustainable energy technologies are beyond the reach of many people,” the IEA said.

The release added: “The most fundamental inequalities face the nearly 750 million people in emerging and developing economies who lack access to electricity, and the more than 2 billion people who lack clean technologies and cooking fuels.”

However, the energy think tank warned that the risk of price shocks does not disappear with the clean energy transition and governments should continue to be vigilant to new risks that could impact energy security and affordability.

According to the IEA, geopolitical tensions remain important potential drivers of volatility, both in traditional fuels and, more indirectly, in clean energy supply chains.

Moreover, the transition to a more electrified energy system may introduce a new set of risks of a more local and regional nature, especially if investments in networks, flexibility and demand response are delayed.

“Power systems are vulnerable to an increased number of extreme weather events and cyberattacks, so appropriate investments in resilience and digital security are crucial,” the IEA concluded.

In an additional report published in May, the agency revealed that ensuring a reliable and diversified supply of energy transition minerals is critical to achieving net zero emissions targets.

The study also noted that the market size for key energy transition minerals is expected to double by 2040, reaching $770 billion.