91% of New Renewables Now Cheaper Than Fossil Fuels

The economic case for clean energy is undeniable as it is now outpacing fossil fuels on cost. Our partner, the International Renewable Energy Agency (IRENA), confirms in its new Renewable Power Generation Costs in 2024 report that renewables have firmly maintained their cost leadership in global power markets. Thanks to continued technological innovation, increasingly competitive supply chains and powerful economies of scale, renewable energy, especially solar and wind, continues to outpace fossil fuels economically.

In 2024, solar photovoltaic systems were, on average, 41% cheaper than the lowest-cost fossil fuel alternatives, while onshore wind projects were 53% cheaper. Onshore wind held its place as the most affordable source of new electricity at just USD 0.034/kWh, closely followed by solar PV at USD 0.043/kWh. With 91% of new renewable capacity now cheaper than fossil fuel-based generation, the data reveals that the global energy transition is no longer just an environmental imperative, it’s a financial one.

United Nations Secretary-General António Guterres said: “Clean energy is smart economics – and the world is following the money. Renewables are rising, the fossil fuel age is crumbling, but leaders must unblock barriers, build confidence, and unleash finance and investment. Renewables are lighting the way to a world of affordable, abundant, and secure power for all.”

In 2024, the global addition of 582 gigawatts of renewable energy capacity resulted in substantial economic benefits, including the avoidance of fossil fuel use valued at approximately USD 57 billion. Remarkably, 91% of the newly commissioned renewable power projects were more cost-effective than the cheapest new fossil fuel-based alternatives. This reinforces the fact that renewables are not only economically competitive but also offer strategic advantages, reducing reliance on volatile international fuel markets and enhancing energy security.

The economic case for renewables has never been stronger. While ongoing cost reductions are anticipated as technologies advance and supply chains evolve, several near-term challenges remain. Geopolitical factors such as trade tariffs, raw material constraints and shifting manufacturing dynamics, particularly in China, pose risks that could temporarily drive up costs.

Regions like Europe and North America are likely to experience higher costs in the near future due to structural issues, including permitting hurdles, limited grid infrastructure and elevated balance-of-system expenses. In contrast, countries across Asia, Africa and South America, with greater renewable resource potential and steeper learning curves, are well positioned to benefit from continued and possibly accelerated cost declines.

Technological advancements beyond power generation are also increasingly enhancing the overall economics of renewable energy. A key example is battery energy storage systems, whose costs have dropped by an impressive 93% since 2010, reaching USD 192/kWh for utility-scale systems in 2024. This dramatic decline is largely due to scaled-up manufacturing, improved materials and more efficient production processes.

Beyond cost savings, battery storage, hybrid systems that combine solar, wind and storage, as well as emerging digital technologies, are playing a critical role in integrating variable renewable energy into the grid. AI-powered digital tools are improving asset performance and enabling more responsive, adaptive grid operations. Still, major challenges remain, particularly in terms of digital infrastructure, grid flexibility and the need for widespread grid expansion and modernisation. These issues are especially pressing in emerging markets, where insufficient investment in infrastructure continues to limit the full deployment and impact of renewable energy.

As the renewable energy sector continues to expand rapidly, you can keep up to date with the Institute’s articles, or get in touch today to start or advance your career in renewables.

Sources:

https://www.irena.org/Publications/2025/Jun/Renewable-Power-Generation-Costs-in-2024