Global renewable energy deployment reached a record level in 2025, with new installations exceeding 690 gigawatts (GW), around 20 percent higher than in 2024, according to the latest analysis from the International Renewable Energy Agency (IRENA). Solar photovoltaic (PV) led the expansion with more than 500 GW of new capacity, while wind energy contributed around 160 GW, enabling renewables to overtake coal as the world’s largest source of installed electricity generation capacity.
Asia remained the engine of global renewable growth, with China accounting for nearly two-thirds of new solar capacity and three-quarters of global wind additions. The rapid deployment reinforces China’s leadership in clean energy manufacturing and project development, IRENA report said.
Solar and Wind Remain the Cheapest Sources of New Electricity
Renewable energy maintained its cost leadership despite rising financing costs. The global weighted-average levelised cost of electricity (LCOE) for solar PV remained unchanged at USD 44 per megawatt hour (MWh) in 2025. Onshore wind declined to USD 33/MWh, while offshore wind fell to USD 78/MWh, supported by lower equipment prices and reduced installation costs.
Among dispatchable renewable technologies, costs increased mainly because of lower electricity output rather than higher technology costs. Hydropower LCOE increased to USD 62/MWh, geothermal reached USD 89/MWh, and concentrated solar power (CSP) rose to USD 115/MWh. Bioenergy was the exception, with costs declining to USD 86/MWh due to higher generation.
Renewables Continue to Outperform Fossil Fuel Power
More than 90 percent of utility-scale renewable energy projects commissioned during 2025 generated electricity at a lower cost than the cheapest new fossil fuel alternative.
Meanwhile, gas-fired power became significantly more expensive. A global shortage of gas turbines, partly driven by surging demand from AI data centres, pushed the capital expenditure of new combined-cycle gas plants in the United States to approximately USD 2,400 per kilowatt (kW). Electricity generation costs from new gas plants in high-gas-price markets such as Italy, Germany, and Japan climbed towards USD 100/MWh.
Since 2010, renewable technologies have recorded dramatic cost reductions. Solar PV costs have fallen by 89 percent, CSP by 72 percent, onshore wind by 71 percent, offshore wind by 63 percent, and bioenergy by 3 percent. In contrast, hydropower costs increased by 41 percent, while geothermal costs rose by 53 percent over the same period.
China and India Deliver the Lowest Renewable Power Costs
Renewable electricity costs varied considerably across markets. China recorded the world’s lowest onshore wind LCOE at USD 27/MWh and one of the lowest solar PV costs at USD 36/MWh.
Across major economies, solar PV costs ranged from USD 35/MWh in India to USD 65/MWh in Germany. Solar generation costs in both the United States and Germany were nearly double those in China because of permitting delays, grid interconnection bottlenecks, and higher balance-of-system costs.
For onshore wind, costs ranged from USD 27/MWh in China to USD 52/MWh in Germany, highlighting the impact of regional supply chains, regulatory frameworks, and project development costs.
Battery Storage Costs Drop Nearly 30 Percent in One Year
Battery energy storage continued to transform renewable energy economics in 2025. The installed cost of a four-hour utility-scale battery declined to USD 140 per kilowatt-hour (kWh), representing a reduction of nearly 30 percent in a single year and approximately 95 percent since 2010.
Lower battery prices are accelerating the integration of energy storage with solar and wind projects, improving grid utilisation, shifting electricity generation to periods of higher demand, and reducing exposure to volatile wholesale electricity prices.
Manufacturing Investment Slows as Renewable Costs Enter a New Phase
IRENA notes that the rapid cost declines seen over the past decade are entering a more mature phase. After substantial manufacturing expansion in China drove solar module prices down by roughly two-thirds between 2022 and 2024, the industry is now experiencing slower investment growth.
Global clean technology manufacturing investment has more than halved between 2023 and the end of 2025. China is consolidating its renewable manufacturing industry and removed value-added tax rebates on certain solar PV exports in April 2026, while rising commodity and component prices are increasing wind turbine costs in Western markets.
These factors are expected to place upward pressure on total installed renewable energy costs throughout 2026.
Renewable Energy Costs Expected to Keep Falling Through 2035
Despite short-term cost pressures, IRENA expects renewable energy to remain on a long-term downward cost trajectory. By 2035, total installed costs are projected to decline by around 40 percent for solar PV and 20 percent for onshore wind, although the pace of reduction will be significantly slower than the declines achieved since 2010.
Renewables Avoid 8.4 Gigatonnes of CO₂ and Save USD 480 Billion
Beyond lower electricity prices, renewable energy delivered substantial economic and environmental benefits during 2025. Global renewable generation avoided approximately 8.4 gigatonnes of carbon dioxide (CO₂) emissions while reducing fossil fuel expenditure by an estimated USD 480 billion.
Renewable energy also strengthened energy security by reducing dependence on imported fossil fuels. In Indonesia, Thailand, and the Philippines, renewable electricity displaced around USD 5.7 billion worth of coal and natural gas imports during 2025, demonstrating the growing role of clean energy as a hedge against fuel price volatility and geopolitical risks.
BABURAJAN KIZHAKEDATH