Renewable Energy Surpasses Fossil Fuels in Global Cost
Renewable energy sources have become the most cost-effective option for new power generation worldwide. In 2024, renewable capacity additions surged by nearly 20 per cent from the previous year. This growth helped cut fossil fuel costs by $467 billion and avoided $57 billion in fossil fuel use. Technological progress, economies of scale and competitive supply chains have driven these cost advantages. The global shift to renewables is enhancing energy security and economic stability amid volatile energy markets.
Global Renewable Capacity Expansion
In 2024, the world added 582 gigawatts of renewable energy capacity. Asia led this growth with 413.2 GW added, driven mainly by China. China contributed 61.2 per cent of global solar photovoltaic (PV) additions and 69.4 per cent of new wind power installations. Other major contributors were the United States, Brazil and Germany. This reflects a broadening geographical spread of renewable investments.
Cost Competitiveness of Renewables
Renewables remain cheaper than fossil fuels on a levelised cost of electricity basis. About 91 per cent of new utility-scale renewable projects produced electricity at lower costs than the cheapest fossil fuel alternatives. Onshore wind was the most affordable, costing 53 per cent less than fossil fuel options, followed by solar PV at 41 per cent lower cost. In 2024, onshore wind cost $0.034 per kWh, solar PV $0.043 per kWh and hydropower $0.057 per kWh.
Declining Installation Costs
Installed costs for renewable technologies fell sharply between 2010 and 2024. Solar PV dropped to $691 per kW, onshore wind to $1,041 per kW and offshore wind to $2,852 per kW. These reductions reflect improved manufacturing, supply chains and technology efficiency.
Advances in Energy Storage
Battery energy storage systems (BESS) costs plunged by 93 per cent since 2010, reaching $192 per kWh in 2024. Lithium-ion batteries dominate utility-scale storage, especially lithium iron phosphate types. BESS installations often accompany solar PV to manage peak demand, frequency and grid stability. The United States and China lead in BESS deployment, supported by policies and grid requirements.
Future Cost Trends and Regional Variations
Cost declines will continue but at a slower rate. High-growth regions in Asia, Africa and South America could see further reductions due to strong learning rates and market expansion. Europe and North America may face higher costs because of permitting delays and system expenses. Market maturity has stabilised solar and wind prices, indicating efficient supply chains and widespread deployment.
Impact on Energy Markets and Emissions
Renewables now account for 46.4 per cent of global installed electricity capacity. This share displaces coal and gas in major markets such as China, the US and the EU. Reduced fossil fuel use lowers greenhouse gas emissions and exposure to fuel price volatility. Renewables shift fossil fuel plants to peak or backup roles, enhancing grid resilience and economic stability.
Global Policy and Leadership
International leaders advocate for accelerating the transition to renewables. The United Nations Secretary-General emphasised the economic and social benefits of this shift. Renewables are seen as key to sustainable development, energy security and climate goals.
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