The cost of clean power technologies, including wind, solar, and battery storage, is projected to decrease further in 2025, continuing the trend of record-breaking cost reductions.
According to a report by BloombergNEF (BNEF), new wind and solar farms are now more cost-effective than coal and gas plants in nearly every market worldwide. However, rising protectionist policies, such as import tariffs, may temporarily impact these declining costs. Despite these barriers, the long-term outlook suggests a significant reduction in the levelized cost of electricity (LCOE) for renewable energy technologies.
BNEF predicts a 2-11 percent reduction in the cost of clean power technologies in 2025. Several factors contribute to this trend, including the global benchmark cost for battery storage projects, which fell by 33 percent in 2024, reaching $104 per megawatt-hour (MWh), driven by surplus supply due to slower electric vehicle sales.
Fixed-axis solar farm costs declined by 21 percent in 2024, with no indication of the overcapacity in the solar supply chain easing in 2025. Wind and solar energy costs are expected to fall by 4 percent and 2 percent, respectively, in the coming year. Battery storage prices are anticipated to dip below $100/MWh in 2025, marking a key milestone for energy storage affordability.
New wind and solar projects are increasingly outcompeting fossil fuel-based energy production in terms of cost. In the U.S., solar plants without subsidies are nearly as cost-effective as new gas plants, despite U.S. gas prices being lower than those in Europe and Asia.
As the U.S. considers exporting liquefied natural gas, domestic gas prices may face global competition, further boosting the appeal of solar energy. Renewable energy cost reductions have made clean power more accessible, allowing developing nations to transition away from expensive, polluting fossil fuel sources.
China’s dominant position in clean technology manufacturing has played a crucial role in driving down costs. However, this has led to concerns about unfair competition. China produces electricity from major power-generating technologies at 11-64 percent lower costs than other markets.
Onshore wind power in China costs 24 percent less than the global benchmark of $38/MWh. While wind turbine prices have declined in China, they have risen in other regions since 2020 due to supply chain constraints and pricing strategies by manufacturers.
In response, countries such as the U.S. and European Union members have imposed tariffs on Chinese clean energy imports, including solar panels and electric vehicles. These protectionist measures aim to safeguard local industries but could slow the pace of cost reductions globally.
Despite trade barriers, clean energy technologies are expected to become even more affordable in the long run. BNEF projects that by 2035, onshore wind LCOEs will drop by 26 percent, offshore wind LCOEs will decline by 22 percent, fixed-axis solar LCOEs will decrease by 31 percent, and battery storage costs will plummet by nearly 50 percent.
Industry experts believe that the ongoing decline in renewable energy costs is too strong to be reversed by political or economic interventions. Matthias Kimmel, head of energy economics at BNEF, stated, “China is exporting green energy tech so cheaply that the rest of the world is thinking about erecting barriers to protect their own industries. But the overall trend in cost reductions is so strong that nobody, not even President Trump, will be able to halt it.”
The rapid decrease in clean energy costs is set to reshape the global energy landscape. As renewables continue to outperform fossil fuels in affordability and accessibility, countries worldwide will accelerate their shift toward a sustainable, carbon-free future. While trade policies may create short-term disruptions, the broader trend of declining clean energy costs remains a powerful force driving the global transition to renewable energy.
GreentechLead.com News Desk