Global LCOE Trends In 2024: Renewables Surge Ahead With Up To 67% Cost Reductions – Report

In 2024, renewable energy technologies like wind and solar are making significant strides, as highlighted in the latest Levelised Cost of Electricity (LCOE) reports from Wood Mackenzie. A senior research analyst at the company explained that while there is some variation in cost competitiveness across different regions, renewable energy is steadily outpacing traditional fossil fuels.

For solar photovoltaic (PV) systems, fixed-axis systems have an average global LCOE of $66 per megawatt-hour (MWh), ranging from $28 to $117. This broad range reflects factors like location, technology advancements, and market conditions. Systems with single-axis tracking perform slightly better, averaging $60/MWh, with a range from $31 to $103. These systems are playing an increasingly important role in large-scale projects.

Onshore wind technology, another key player, averages $75/MWh globally, with costs ranging from $23 to $139. This wide range demonstrates the competitiveness of wind energy across different terrains and markets. Offshore wind, however, is more expensive. Fixed installations average $230/MWh, while floating systems, which are still developing, are much higher at $320/MWh. Although these costs are expected to decrease over time, offshore wind remains a more expensive option compared to onshore.

In the Asia-Pacific region, renewable LCOE has dropped by 16% in 2024, thanks to a significant 21% decrease in capital costs. Solar PV continues to be the cheapest energy generation option in the region, with competition driving down project costs. Distributed PV systems saw the steepest cost reductions, with a 33% decrease, largely due to more efficient technologies like TOPCon and HJT. Offshore wind, however, remains a premium technology, with cost advantages mainly in China, while other countries struggle with high costs due to supply chain and inflationary challenges.

In Europe, the average LCOE for renewables only dropped slightly, by 0.2%, even though installation costs fell by 9% from 2020 to 2023. Southern Europe leads the region with the lowest LCOE for utility-scale solar PV. Looking ahead, renewable energy costs could be up to 85% cheaper than fossil fuels by 2060. However, investments in low-carbon technologies will be needed to ensure grid stability as renewable capacity grows.

In North America, the LCOE for renewables fell by 4.6% in 2024, driven by capital cost reductions. Solar and wind are expected to see further drops, with utility-scale solar projected to decrease by 60% by 2060. Onshore wind will likely see a 42% drop, while offshore wind will experience a 67% reduction by 2060, though short-term challenges remain.

Across Latin America, the Middle East, and Africa, renewables are becoming more competitive due to easing supply chain issues and falling capital costs. In the Middle East and Africa, single-axis tracking solar PV is emerging as the most cost-effective option, with some regions expected to reach highly competitive prices by 2060.

A senior research analyst emphasized that these findings show how rapidly renewables are becoming more competitive and reshaping global energy markets, leading to a future where power is cheaper, more accessible, and more sustainable.