Renewable projects commissioned in 2025 saved an estimated $480 billion in global fossil fuel costs, finds new report by IRENA.
Over 90% of new utility-scale capacity undercut the cheapest new fossil plants, report finds.
Solar, onshore and offshore wind all maintained or improved their cost edge,
The renewables shielded economies from fuel price shocks and reinforcing renewables as a cornerstone of energy security and resilience.
Renewable energy projects commissioned in 2025 helped avoid an estimated $480 billion in fossil fuel costs globally, with more than 90 per cent of newly added utility-scale renewable capacity generating electricity at a lower cost than the cheapest new fossil fuel alternative, according to a new report by the International Renewable Energy Agency (IRENA).
The report, Renewable Power Generation Costs in 2025, found that renewable energy continued to strengthen its cost advantage over fossil fuels even as geopolitical tensions and rising gas prices increased the cost of conventional power generation. Existing renewable energy assets also cushioned economies from fuel price shocks, reinforcing their role in improving energy security and economic resilience.
Solar photovoltaic (PV) electricity remained unchanged at $44 per megawatt-hour (MWh) in 2025, while onshore wind costs declined 4 per cent to $33/MWh and offshore wind costs fell 3 per cent to $78/MWh. In contrast, gas-fired power became more expensive as turbine shortages nearly doubled the capital cost of new combined cycle gas plants in the United States, while generation costs approached $100/MWh in high gas price markets such as Italy, Germany and Japan. Renewed uncertainty in West Asia is also expected to keep gas prices elevated through the year.
“The decline in renewable energy costs is delivering a powerful economic dividend. For countries that still rely heavily on fossil fuels, every additional megawatt of renewables strengthens economic protection against fuel price volatility, shielding consumers, businesses and public finances from higher costs. Savings generated by existing renewable assets grow, providing a built-in hedge against future shocks. This energy crisis has shown yet again: expanding renewable capacity is a strategic investment in resilience and competitiveness,” said Francesco La Camera, director general for IRENA.
The report said renewables acted as a financial buffer during the closure of the Strait of Hormuz in early 2026, when energy import prices surged across Asia and Europe.
Across Indonesia, Thailand and the Philippines, the existing renewable energy fleet avoided around $5.7 billion in coal and gas purchases in 2025. At the higher fuel prices prevailing during the March to May 2026 crisis, those same avoided fuel volumes would have been worth $6.5 billion. Had renewable generation in these countries been doubled, the avoided fuel costs would have reached $12.9 billion.
Across 20 major economies accounting for around four-fifths of global renewable electricity generation, renewable power avoided an estimated $377 billion in fossil fuel purchases during 2025.
China accounted for the largest share of savings at $177 billion, followed by the United States at $35 billion, Brazil at $32 billion, India at $18 billion, Germany at $18 billion and Japan at $15 billion.
While renewable technologies remain the cheapest source of new electricity, IRENA said the sector faces emerging cost pressures.
Clean technology manufacturing investment has fallen by half from a quarterly peak of $70 billion in 2023 to around $35 billion by the end of 2025. China is consolidating its renewable manufacturing industry while commodity and component prices are rising globally. These developments, together with changing trade and tariff policies, are expected to push up installed costs during 2026.
The report also found that financing costs have become a larger barrier than technology costs in many markets. National macroeconomic conditions account for around 56 per cent of variations in financing costs, more than twice the influence of technology itself, making access to affordable capital a critical challenge, particularly for emerging and developing economies.
IRENA said expanding renewable capacity remains the most effective way to reduce exposure to volatile fossil fuel markets while strengthening energy security and competitiveness.
The report called for accelerated investment in electricity grids, battery storage and system flexibility to support higher renewable penetration. It also highlighted the need to speed up electrification of end-use sectors and improve access to affordable finance, particularly in developing economies where high financing costs remain the biggest obstacle to renewable deployment.
Despite near-term pressures, IRENA expects renewable costs to continue declining through 2035, albeit at a slower pace than during the past decade. Since 2010, the cost of solar PV has fallen by 89 per cent, concentrating solar power by 72 per cent, onshore wind by 71 per cent and offshore wind by 63 per cent. Over the next decade, total installed costs are projected to decline by around 40 per cent for solar PV and 20 per cent for onshore wind.