Renewables Remain World’s Cheapest New Power Source as Global Capacity Tops 690 GW in 2025—IRENA Report

The International Renewable Energy Agency (IRENA) has said that renewable energy has further strengthened its position as the world’s cheapest source of new electricity, supported by record capacity additions and continued improvements in the cost competitiveness of solar and wind power. According to the agency’s latest report, the global renewable energy sector achieved another major milestone in 2025, with more than 690 GW of new renewable power capacity installed worldwide. This was about 20% higher than the additions recorded in the previous year. Solar photovoltaic (PV) remained the largest contributor, adding more than 500 GW, while wind energy contributed around 160 GW. IRENA also noted that renewable energy has now overtaken coal to become the world’s largest source of installed power capacity.

The report stated that more than 90% of newly commissioned utility-scale renewable energy projects generated electricity at a lower cost than the cheapest newly built fossil fuel power plants. Among all renewable technologies, onshore wind emerged as the lowest-cost source of new electricity globally, with a levelised cost of electricity (LCOE) of USD 33 per megawatt hour (MWh). Solar PV followed with an LCOE of USD 44/MWh, while offshore wind recorded an average cost of USD 78/MWh. Although solar PV costs remained almost unchanged compared to 2024, both onshore and offshore wind projects became more affordable due to lower equipment prices and installation costs.

IRENA said that the period of sharp cost reductions seen over the past decade for mature renewable technologies is now beginning to stabilise. Since 2010, the cost of solar PV has fallen by 89%, while onshore wind and offshore wind costs have declined by 71% and 63%, respectively. However, the agency expects technology costs to continue declining gradually over the coming years. Between 2026 and 2035, solar PV installation costs are projected to decrease by around 40%, while onshore wind costs are expected to fall by another 20%.

Battery energy storage continued to show the fastest progress among clean energy technologies in 2025. The installed cost of four-hour utility-scale battery storage systems declined by nearly 30% from the previous year to around USD 140 per kilowatt-hour. Compared to 2010, battery storage costs have dropped by almost 95%. Falling battery prices have encouraged the development of hybrid renewable energy projects, with nearly one-quarter of newly commissioned utility-scale solar projects now being paired with battery storage systems. According to IRENA, these hybrid systems are capable of providing reliable round-the-clock electricity at costs below USD 85/MWh in high-quality locations, making them increasingly competitive with conventional power generation.

The report also highlighted significant regional differences in renewable energy costs. China remained the world’s lowest-cost market for renewable electricity, with onshore wind generating power at an LCOE of USD 27/MWh and solar PV at USD 36/MWh. In contrast, renewable energy costs remained higher in countries such as Germany and the United States because of higher financing costs, permitting delays, and grid connection expenses. IRENA said financing conditions have become one of the biggest factors influencing renewable electricity costs, especially in developing countries where access to affordable capital remains limited.

Despite the continued growth of renewable energy, IRENA warned that new challenges are emerging. Investment in clean technology manufacturing has declined since reaching its peak in 2023. At the same time, rising commodity prices, changing trade policies, and higher borrowing costs could increase renewable project costs in the coming years. The agency stressed that future progress will depend not only on expanding renewable generation but also on strengthening electricity grids, increasing energy storage capacity, and improving system flexibility.

IRENA also highlighted the wider economic and environmental benefits of renewable energy. It is estimated that renewable power generation helped avoid around USD 480 billion in fossil fuel costs and prevented approximately 8.4 gigatonnes of carbon dioxide emissions during 2025. The agency concluded that renewable energy has evolved beyond being the cheapest source of electricity and has become a key pillar of energy security, economic competitiveness and climate action. It added that continued investments in electricity grids, storage, financing and electrification will be essential to sustain the global energy transition in the years ahead.