IRENA: Incentivise renewables deployment to minimise impacts of global energy shock
For instance, IRENA estimates that new solar PV and wind additions across the EU has reduced the demand for fossil fuels from areas in the Middle East that have been impacted by the conflict, saving the bloc €58 billion (US$67.8 billion) in additional fuel costs that would have had to be paid to import fossil fuels amid the conflict.
This echoes a similar conclusion drawn by trade body SolarPower Europe earlier this month, which found that Europe’s domestic solar capacity has saved EU countries over US$127.5 million a day since the start of the war by minimising the demand for fossil fuels.
‘The strategic case for renewables’
The IRENA document makes a number of policy recommendations to facilitate further renewable energy deployment with this economic background in mind, split over short- (up to six months), medium- (up to one year) and long-term (up to three years) timeframes.
The short-term recommendations include deploying distributed renewable energy projects alongside solar-plus-storage projects for off-grid use, as these systems are much faster to deploy than utility-scale projects or traditional grid expansion work, and introducing “grants, subsidies or tax rebates” to make renewable energy a more compelling investment option.
PV Tech Premium heard earlier this year from SolarPower Europe about financial mechanisms, such as government auctions, and the role they have to play in making solar an attractive investment case for would-be financiers.
IRENA’s medium-term recommendations include fast-tracking current renewable energy and grid infrastructure projects, alongside incentivising battery energy storage system (BESS) deployments to improve overall grid resilience. The long-term recommendations include developing supportive policy frameworks to encourage renewable energy deployments in the long-term and supporting domestic and regional energy supply chains to minimise reliance on volatile global power prices.
“The current crisis clearly demonstrates the strategic case for renewables as a national security imperative”, said IRENA director-general Francesco La Camera. “There is an opportunity to prioritise actions that enhance long-term energy stability.
“Governments must urgently consider targeted interventions to steer investment and emergency responses towards accelerating the deployment of renewable power and the electrification of energy-consuming processes and sectors.”
In addition to the energy security angle, IRENA highlights the low cost of renewable energy generation, compared to fossil fuel alternative, as a key advantage of the technologies. As of 2024, 91% of new utility-scale renewable energy capacity has a lower levelised cost of electricity (LCOE) than the cheapest fossil fuel-based alternative. This is particularly true for the solar sector, where the costs of solar PV have fallen by 87% since 2010, and BESS, where costs have fallen by 93%.
Earlier this year, figures from Bloomberg New Energy Finance (BNEF) found that the LCOE of fixed-tilt solar PV increased by 6% between 2024 and 2025. However, BNEF’s Jenny Chase told PV Tech Premium that this uptick was “anomalous”, and does not subtract from more sustained long-term trends that suggest favourable economics for solar and storage.