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

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

The Energy Agency has warned that additional investment is needed in the sector to meet net zero targets by 2050.

“The report shows how additional investment is required to achieve net-zero emissions by 2050, while the cost of operating the global energy system will more than halve over the next decade compared to the trajectory based on today’s policy settings. The end result is a more affordable and fairer energy system for consumers,” says the energy think tank.

Clean technologies are cost competitive

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

“In 2023, more than 95 percent of new solar PV and new onshore wind capacity had lower production costs than new coal and natural gas,” the energy agency said.

He added: “Solar PV module prices are now extremely low – falling by 30 per cent in 2023 – creating affordable options for everything from utility-scale projects to home solar systems, with their value enhanced by cheaper batteries. “

The analysis highlighted that electric vehicles, although expensive compared to traditional models, will be cost-effective in the long term due to low maintenance costs.

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

The transition to clean energy depends on upfront investments

The energy think tank further emphasized that the transition to clean energy depends on unlocking higher levels of upfront investment, especially in developing economies.

According to the report, clean energy investment in emerging economies is lagging because of real or perceived risks that hinder new projects and access to financing.

“Furthermore, distortions in the current global energy system in the form of fossil fuel subsidies favor established fuels, making investments in clean energy transitions more challenging,” the IEA said.

He added: “In 2023, governments around the world spent a total of about $620 billion to subsidize fossil fuel use – far more than the $70 billion that was spent to support clean energy investment for consumers.”

How clean energy technologies benefit customers

According to the analysis, the benefits of a faster energy transition and increasing shares of renewables such as solar and wind energy will help end customers, as clean technologies are less volatile than petroleum product prices.

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

“The data clearly show that the faster the transition to clean energy becomes more cost-effective for governments, businesses and households,” said Fatih Birol, Executive Director of the IEA.

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

Political intervention is key to accelerating the energy transition

The Energy Agency further noted that incentives and increased support aimed primarily at more disadvantaged households can improve the adoption of clean energy technologies in the coming years.

According to the IEA, promoting clean energy technologies will help consumers take full advantage of these renewable energy sources and save costs, while supporting efforts to meet international energy and climate goals.

The report suggests additional steps governments can take to accelerate the adoption of clean technologies, including providing energy efficiency improvement programs to low-income households, requiring utilities to fund more efficient heating and cooling packages, and providing affordable green transportation options.

“Policy intervention will be key to addressing the stark inequalities that already exist in the current energy system, where affordable and sustainable energy technologies are out of reach for many people,” the IEA said.

The statement added: “Nearly 750 million people in emerging and developing economies lack access to electricity and more than 2 billion people without clean cooking technologies and fuels face the most fundamental inequalities.”

However, the energy think tank warned that the risk of price shocks does not disappear in clean energy transitions and that governments should remain vigilant about new threats that could affect energy security and affordability.

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

Furthermore, the transition to a more electrified energy system could bring a new set of risks that are more local and regional in nature, especially if investments in networks, flexibility and demand response lag behind.

“Energy systems are vulnerable to an increase in extreme weather events and cyber-attacks, making adequate investments in resilience and digital security critical,” the IEA concluded.

In a supplementary report released in May, the agency revealed that ensuring a reliable and diverse supply of minerals for the energy transition is critical to achieving net zero goals.

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

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