Renewables save $480 billion in fossil fuel costs in 2025 as price advantage widens: IRENA

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.