Photo: Anastasia Palagutina on Unsplash
The fossil fuel age is crumbling, according to UN Secretary-General António Guterres. Renewables maintained their cost leadership in global power markets, the International Renewable Energy Agency said in an annual report. In 2024, onshore wind farms were the cheapest of all versus the lowest-cost fossil fuel alternatives, by 53% on average, while photovoltaic systems were 41% cheaper.
Onshore wind power was also the cheapest in levelized cost of electricity (LCOE) terms, followed by solar power. At the same time, 91% of newly commissioned utility-scale capacity was delivering power at a cost lower than for the cheapest electricity from new fossil fuel–fired units.
The Renewable Power Generation Costs in 2024 report confirmed the price advantage of renewables over fossil fuels, with cost declines driven by technological innovation, competitive supply chains and economies of scale, the International Renewable Energy Agency said. IRENA expects cost reductions to continue, but highlighted the short-term challenges.
Geopolitical shifts including trade tariffs, raw material bottlenecks, and evolving manufacturing dynamics, particularly in China, could temporarily raise costs.
Asia, Africa and South America, with stronger learning rates and high renewable potential, could see pronounced cost declines.
Higher costs are likely to persist in Europe and North America, driven by structural challenges such as permitting delays, limited grid capacity, and higher balance-of-system expenses, according to the update. In contrast, regions like Asia, Africa and South America, with stronger learning rates and high renewable potential, could see pronounced cost declines.
The organization pointed to the need for stable and predictable revenue frameworks to lower investment risk and attract capital.
“Clean energy is smart economics – and the world is following the money,” United Nations Secretary-General António Guterres stressed. In his view, the fossil fuel age is crumbling.
Capital costs inflating LCOE in developing countries
Mitigating financing risk is central to scaling renewables in both mature and emerging markets. Instruments such as power purchase agreements (PPAs) play a pivotal role in accessing affordable finance, while inconsistent policy environments and opaque procurement processes undermine investor confidence, IRENA added.
In many developing countries of the Global South, high capital costs, influenced by macroeconomic conditions and perceived investment risks, significantly inflate the levelized cost of electricity (LCOE) of renewables.
Onshore wind power production cheapest by far of all kinds of electricity
In 2024, onshore wind farms were the cheapest of all versus the lowest-cost fossil fuel alternatives, by 53% on average, while photovoltaic facilities were 41% cheaper. Of note, the cost of battery energy storage systems (BESS) declined by 93% from 2010 to 2024, to USD 192 per kWh.
Onshore wind remained the most affordable source of new renewable electricity, with a global weighted average LCOE at USD 0.034 per kWh (USD 34 per MWh), followed by new solar, at USD 0.043 per kWh, and new hydropower plants, USD 0.057 per kWh.
Again per the levelized cost of electricity, newly commissioned utility-scale renewables capacity was delivering power at a 91% lower cost than the most affordable new fossil fuel–based units.
That said, LCOE increased slightly for solar power, by 0.6%. Onshore wind power was 3% more expensive than in 2023, compared to 4% for offshore wind and 13% for the bioenergy segment. Meanwhile, costs declined for concentrated solar power (CSP), by 46%, followed by electricity from geothermal units, 16%, and hydropower, which slipped 2%.
Solar and wind energy prices have begun to stabilize, which is a natural sign of market maturity, the authors underscored.
Clear path to affordable, secure, sustainable energy
The addition of 582 GW of renewables capacity in 2024 led to significant cost savings, avoiding fossil fuel use valued at about USD 57 billion, new data shows. Looking at all renewables in operation, the avoided fossil fuel costs in 2024 reached up to USD 467 billion, IRENA’s Director-General Francesco La Camera stated.
New renewable power outcompetes fossil fuels on cost, offering a clear path to affordable, secure and sustainable energy, he pointed out.
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