Renewable energy continues to dominate global power markets by cost, with solar and wind maintaining their lead over fossil fuel sources, according to the International Renewable Energy Agency’s (IRENA) latest publication, Renewable Power Generation Costs in 2024.
The report confirms that renewable energy sources are not only economically viable but remain the most cost-effective solution for new power generation. Technological innovations, maturing supply chains, and economies of scale have contributed to these gains.
In 2024, solar photovoltaics (PV) were, on average, 41% cheaper than the most affordable fossil fuel alternatives. Onshore wind projects were 53% cheaper, making it the lowest-cost source of new renewable electricity at USD 0.034/kWh, closely followed by solar PV at USD 0.043/kWh.
The global energy landscape saw the addition of 582 GW of renewable capacity in 2024, resulting in fossil fuel savings estimated at USD 57 billion. Remarkably, 91% of all new renewable projects were more cost-effective than any fossil fuel-fired generation options.
“Clean energy is smart economics – and the world is following the money,” said UN Secretary-General António Guterres.
IRENA estimates that renewables in operation in 2024 helped avoid up to USD 467 billion in fossil fuel costs, further reinforcing their financial viability.
Challenges Persist Despite Progress
While the long-term cost trend for renewables remains positive, short-term challenges could slow momentum. The report highlights geopolitical shifts, including trade tariffs, raw material constraints, and evolving manufacturing dynamics—particularly in China—as potential headwinds.
Europe and North America are expected to see persistently higher costs due to permitting delays, grid capacity constraints, and higher balance-of-system costs. In contrast, Asia, Africa, and South America could benefit from faster cost declines, thanks to favorable learning curves and abundant renewable resources.
“The cost-competitiveness of renewables is today’s reality,” said IRENA Director-General Francesco La Camera. “But the pace and fairness of the energy transition hinge on the choices we make today.”
Investment, Financing, and Infrastructure Gaps
IRENA warns that inconsistent policies, opaque procurement processes, and weak financing structures continue to deter investment—particularly in emerging markets.
The agency emphasizes the role of stable and predictable revenue frameworks, such as power purchase agreements (PPAs), in mitigating risk and attracting capital.
Integration costs, especially those tied to grid connection and permitting delays, are becoming a key constraint. This is particularly severe in G20 and Global South nations, where grid expansion is lagging behind renewable deployment.
Furthermore, the report highlights significant financing disparities. For example, while the cost of onshore wind is similar in Europe and Africa at around USD 0.052/kWh, African projects face much higher financing costs due to perceived investment risks. IRENA’s assumed cost of capital varied from 3.8% in Europe to 12% in Africa.
Technological Innovation Strengthens the Business Case
Cost reductions are also being driven by advances beyond generation. The cost of battery energy storage systems (BESS) has dropped 93% since 2010, reaching USD 192/kWh for utility-scale systems in 2024.
Hybrid systems—combining solar, wind, and BESS—alongside digital innovations and AI-enabled tools, are improving performance and grid flexibility. However, infrastructure investment is still needed in emerging markets to fully realize these benefits.
A Clear Path Forward
IRENA concludes that the global energy transition is irreversible, but its pace will depend on how effectively the world addresses financing gaps, enhances international cooperation, and builds resilient supply chains.
The business case for renewables is stronger than ever, but unlocking their full potential will require policy stability, investor confidence, and infrastructure development, especially in the Global South.
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