Renewables maintained their cost edge over fossil fuels in 2024, according to IRENA’s latest cost report. The trend is supported by steady advances in technology, increasingly efficient supply chains and the ongoing benefits of scale.
In 2024, utility-scale solar photovoltaics (PV) were on average 41 percent cheaper than the most affordable fossil fuel alternatives. Onshore wind projects delivered even greater savings, coming in 53 percent lower and ranking as the most cost-effective source of new electricity generation at USD 0.034/kWh, followed by solar PV at USD 0.043/kWh.
The addition of 582 GW of renewable capacity in 2024 helped avoid fossil fuel costs of around USD 57 billion. Notably, 91 percent of newly commissioned renewable projects were more cost-effective than any fossil-based alternative.
Beyond their direct cost advantages, renewables strengthen energy security and reduce dependence on volatile global fuel markets. IRENA notes that the business case for renewables is now stronger than ever.
Cost trends and regional disparities
While long-term cost declines are expected to continue, near-term risks remain. Trade tariffs, raw material constraints and manufacturing shifts, particularly in China, could temporarily drive up project costs.
Renewables boom highlights growing regional divide
In Europe and North America, structural challenges such as lengthy permitting processes, limited grid infrastructure and higher balance-of-system costs are keeping prices elevated. In contrast, markets in Asia, Africa and South America—with high learning rates and abundant solar and wind potential—may see sharper cost declines.
Financing and integration pressures
The report underscores the central role of financing in scaling up renewables. Power purchase agreements, predictable revenue models and stable regulatory frameworks are key to unlocking affordable capital. Yet policy inconsistency and opaque procurement remain major hurdles in many regions.
Integration costs are also becoming a major constraint. Projects face increasing delays due to grid connection bottlenecks, slow permitting and limited availability of local components. These challenges are especially pressing in G20 and fast-growing emerging markets, where grid expansion is lagging behind the surge in renewable generation.
IEA – solar PV draws more investment than any other energy tech
Financing costs remain a decisive factor in project viability. IRENA highlights stark regional disparities in capital costs: while the levelised cost of electricity (LCOE) for onshore wind averaged around USD 0.052/kWh in both Europe and Africa, project structures varied widely. European projects were driven by capital expenditure, whereas African projects faced much higher financing costs. The assumed cost of capital ranged from 3.8% in Europe to 12% in Africa, underscoring the impact of differing risk perceptions.
Beyond generation: storage and digitalisation
Technological innovation is also progressing beyond generation. Since 2010, battery energy storage system (BESS) costs have dropped by 93%, reaching USD 192/kWh for utility-scale systems in 2024. This decline is driven by scaled-up manufacturing, improved materials, and more efficient production processes.
IRENA
Hybrid systems combining solar, wind and storage are becoming more widespread, supported by digital tools and AI-based asset optimisation. These technologies improve system flexibility and grid responsiveness, but further investment is needed in digital infrastructure and grid upgrades, especially in emerging markets.
New EU platform urges tenfold battery storage growth
At the launch of the report, UN 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.”
