Solar PV and Onshore Wind Remain Most Cost-Competitive as LCOE Declines Worldwide, Wood Mackenzie Report Finds

The global levelised cost of electricity (LCOE) continues to reflect substantial advances in renewable energy technologies, with solar photovoltaic (PV) maintaining its position as the world’s most cost-competitive power source through 2025. Single-axis tracker systems in the Middle East and Africa are leading at US$37 per megawatt-hour (MWh), according to Wood Mackenzie. Continued improvements in module efficiency and supply chain stabilisation are expected to drive further cost reductions across major regions.

“Across all regions, renewable technologies demonstrate clear cost advantages over conventional generation. We expect continued cost reductions through technological improvements, supply chain optimisation, and economies of scale, reinforcing renewables’ position as the dominant global power generation technology,” said Amhed Jameel Abdullah, senior research analyst at Wood Mackenzie.

Asia Pacific
In Asia Pacific (APAC), utility-scale solar PV delivers the lowest generation costs, ranging from US$27/MWh in China to US$118/MWh in Japan by 2025. Onshore wind is highly competitive, with China, India, and Vietnam achieving costs of US$25–70/MWh. Hybrid solar-plus-battery systems are gaining momentum as battery costs decline, with Australia stabilising solar output through storage and India pushing hybrid systems toward grid parity. China continues to lead in low-cost energy storage due to intense supplier competition. Offshore wind costs vary significantly, with China showing positive merchant revenue potential, while other markets face elevated costs through the early 2030s.

Europe
Europe’s renewable LCOE fell 7% in 2025, with utility-scale solar PV with single-axis tracking offering the lowest average LCOE. Declining module prices drove a 10% cost reduction from 2024. Onshore wind LCOE is projected to fall 16% through 2030, while offshore wind costs are expected to rise in the early 2030s due to supply chain constraints. Four-hour utility-scale battery storage is projected to fall below US$100/MWh by 2026 and decline another 35% by 2060, while commercial distributed PV LCOE is expected to drop 49% over the same period.

North America
In North America, renewable costs are forecast to decline to 2060 despite short-term challenges, including new US tariffs and investment tax credit phaseouts. Onshore wind LCOE is expected to rise by 24% after 2030 due to tax credit expirations, though merchant revenue projections indicate strong long-term viability. Offshore wind LCOE remains elevated due to policy uncertainty and delayed project development. Gas turbine capital costs and fuel expenses are increasing amid rising power demand, particularly from AI and data center growth. Low-carbon dispatchable technologies, such as small modular reactors and enhanced geothermal, remain more expensive but offer critical system flexibility.

Latin America
Latin America has seen a 23% decline in renewable LCOE between 2020 and 2024, with commercial solar PV achieving the lowest average costs. Onshore wind LCOE is expected to drop 42% by 2060, while fixed-bottom offshore wind costs will fall 67% from 2025 levels. Battery storage LCOE is projected to decrease 24% by 2060 as infrastructure and market maturity improve.

Middle East and Africa
Wind and solar LCOEs across the Middle East and Africa fell 6–10% in 2025. Utility-scale solar PV remains the region’s lowest-cost source, with single-axis tracker PV projected to reach approximately US$17/MWh by 2060. Onshore wind is expected to stabilise around US$30/MWh, while utility-scale battery storage costs are declining steadily.

Abdullah added, “The global energy transition is accelerating at an unprecedented pace, with solar PV and onshore wind emerging as the dominant low-cost options worldwide. Hybrid systems and battery storage are rapidly closing the competitiveness gap, signalling a new era for renewable energy deployment.”