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In 2025, renewable energy remained the most economically competitive option for new electricity generation, as over 90% of newly installed utility-scale renewable capacity came in cheaper than the least expensive new fossil fuel alternatives, according to the International Renewable Energy Agency’s report on renewable power generation costs for that year.
The disparity in cost between renewables and fossil fuels continued to increase. Solar photovoltaic technology held its 2024 price point at $44 per megawatt-hour. Onshore wind expenses dropped by 4%, reaching $33 per megawatt-hour, while offshore wind saw a 3% reduction to $78 per megawatt-hour.
Conversely, new gas-fired power plants encountered escalating expenses due to shortages of turbines and increased fuel costs. In the United States, the capital expenditure for new combined-cycle gas facilities nearly doubled. In markets like Italy, Germany, and Japan, generation costs approached $100 per megawatt-hour. Ongoing volatility in global energy markets is anticipated to maintain elevated gas prices.
Irena calculated that renewable power generation prevented roughly $480 billion in fossil fuel expenditures in 2025, bolstering energy security by lessening dependence on unpredictable fuel markets. Renewable electricity also served as a financial safeguard during energy disruptions, such as the closure of the Strait of Hormuz in early 2026, which drove up energy import prices throughout Asia and Europe.
In Southeast Asia, renewable generation in Indonesia, Thailand, and the Philippines averted approximately $5.7 billion in coal and gas purchases in 2025. During the peak of crisis-era fuel prices from March to May 2026, the value of those savings would have risen to $6.5 billion.
Across 20 major economies that account for about 80% of global renewable generation, renewable energy avoided an estimated $377 billion in fossil fuel purchases. China achieved the largest savings at $177 billion, followed by the United States with $35 billion, Brazil with $32 billion, India with $18 billion, Germany with $18 billion, and Japan with $15 billion.
Irena noted that renewable energy costs have dropped substantially since 2010, with solar photovoltaic decreasing by 89%, concentrating solar by 72%, onshore wind by 71%, and offshore wind by 63%. However, the era of rapid cost reductions is starting to decelerate because of rising commodity prices, evolving trade policies, and shifts in clean technology manufacturing.
Investment in clean-tech manufacturing fell from a quarterly high of $70 billion in 2023 to $35 billion by the end of 2025, as the renewable industry undergoes restructuring, particularly in China. Despite short-term cost pressures, Irena forecasts that renewable power costs will keep declining through 2035, albeit at a slower rate than in prior years.
Francesco La Camera, Director-General, stated that for nations still heavily dependent on fossil fuels, each additional megawatt of renewables enhances economic protection against fuel-price volatility, shielding consumers, businesses, and public finances from higher costs. He emphasized that savings from existing renewable assets increase, offering a built-in hedge against future disruptions, and that this energy crisis has demonstrated once more that expanding renewable capacity is a strategic investment in resilience and competitiveness.
Murat Kurum, COP31 President, remarked that accelerating the deployment of renewable power generation and electrifying daily life is necessary so that more individuals can benefit from these geopolitical shock absorbers.
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