[Initial Moment] Questions Raised by Reaching 'Grid Parity'

Renewable energy is expensive. Although people understand the importance of being eco-friendly, hesitation in choosing it remains. When will the time come to enjoy renewable energy at an affordable price?

'Grid Parity' refers to the point at which the cost of generating electricity from renewable energy equals the price of purchasing electricity from the existing power grid, that is, the cost of producing electricity from traditional fuels. Reaching grid parity means that renewable energy has become cheaper than fossil fuels. It marks a turning point where humanity can be free from carbon-emitting fossil fuels.

According to the International Renewable Energy Agency (IRENA)'s survey of the levelized cost of electricity (LCOE) for renewable energy in various countries as of 2023, renewable energies such as solar and wind have finally reached grid parity.

Beyond the Yeongdeok Wind Power Complex, the first large-scale wind power complex in Korea, a brilliant New Year is rising. The year 2021 is expected to be the inaugural year of South Korea's energy transition, following its declaration of carbon neutrality by 2050. In particular, wind power, which is rapidly growing worldwide, is anticipated to lead the transformation to renewable energy. We hope that South Korea's "Made in Korea" wind power, equipped with world-class wind power technology, will carve new hope and vigorously advance across the globe. Shot with a Nikon D5 camera and a 24-70 lens using multiple exposures. Photo by Dongju Yoon, Uljin, Gyeongbuk.

First, LCOE is an indicator that calculates all the costs required to produce 1 MWh of electricity. It includes all direct costs such as investment, fuel, and operation costs incurred during the operation period of power generation facilities, as well as indirect costs like air pollution costs and insurance fees. It is widely used to compare the economic feasibility of various power sources and evaluate the cost-effectiveness of renewable energy.

The renewable energy source with the greatest reduction in generation cost is solar power. The solar LCOE is $0.044 per kWh, which has decreased by more than 90% compared to $0.46 in 2010. This means that generating the same scale of solar power now costs one-tenth of what it did in 2010. The LCOE of onshore and offshore wind power also dropped by 70% and 63%, respectively, compared to 13 years ago, recording $0.033 and $0.075.

IRENA explained that the factor lowering renewable energy generation costs is technology. During this period, the cost of solar modules and inverters fell by 46%, and installation costs decreased by 36%. Wind turbine prices dropped by 41% outside China and by 64% within China.

On the other hand, the LCOE of fossil fuels is $0.1, which is about 2.3 times higher than solar power and about 3 times higher than onshore wind power. This means that generating electricity from solar or wind power has become cheaper than from fossil fuels. This is welcome news.

However, the problem is that generation costs vary by country. Europe, which has actively promoted renewable energy policies and led technological development, has the lowest renewable energy LCOE in most countries. China has particularly low onshore wind LCOE, and India has especially low solar LCOE. These differences arise not only from technology but also from geographical factors including sunlight and wind quality.

What about us? South Korea's renewable energy LCOE is still higher compared to other countries. While the median solar LCOE among all countries is around $34 to $49 per MWh, South Korea's is as high as $111. The LCOE for offshore wind, a market recently emerging domestically, is $233, which is 3.7 times higher than China's $63. This indicates that South Korea needs more time to reach 'grid parity.' Could this be a warning that the moment may never come?

It is said that artificial intelligence (AI) will completely transform our lives in the near future. AI and the semiconductor industry that accompanies it require enormous amounts of electricity. While advanced countries are racing to develop AI, we cannot just wait for renewable energy to become cheaper.

Unfortunately, the finalization of the 11th Basic Plan for Electricity Supply and Demand, which includes the power supply plan until 2038, has been delayed beyond the year. We hope that a comprehensive energy plan reflecting our reality will be created.

This content was produced with the assistance of AI translation services.