Clean Energy Costs to Continue to Fall in 2025, Report Says

The global weighted average levelised cost of electricity (LCOE) from newly commissioned utility-scale solar photovoltaic (PV), onshore wind, offshore wind, and hydropower fell in 2023, with solar PV projects showing the most significant decrease (by 12%). This trend is expected to continue in 2025, driven by technological advancements, economies of scale, policy support, supply chain development, and innovation. These factors have contributed to the continued decline in clean energy costs, making renewable power increasingly competitive with fossil fuel alternatives.

The cost reductions in clean energy technologies have improved the competitiveness of renewable power compared to fossil fuel alternatives. In 2023, the global weighted average LCOE of new onshore wind projects was 67% lower than the weighted average fossil fuel-fired alternative, while the LCOE of solar PV was 56% less than the weighted average fossil fuel-fired alternatives. This trend is expected to continue in 2025, with renewable power generation costs falling further.

The decline in clean energy costs has significant implications for energy security and emissions reduction. The new renewable capacity added since 2000 is estimated to have reduced electricity sector fuel costs by at least USD 409 billion in 2023, showcasing the benefits renewable power can provide in terms of energy security. The rapid growth of renewable energy capacity is expected to outpace current government goals for 2030, with global renewable capacity growing by 2.7 times by 2030, surpassing countries' current ambitions by nearly 25%. This growth in renewable energy capacity will help reduce greenhouse gas emissions, as renewable power generation emits significantly less CO2 than fossil fuel alternatives.

Government policies and industrial strategies play a crucial role in facilitating the growth of clean energy technologies and the decline in their costs. Major economies like China, the United States, and the European Union have implemented various policies to support the growth of clean energy technologies, such as competitive auctions, corporate power purchase agreements, and clear targets. These policies have contributed to the decline in costs for clean energy technologies, making them more competitive with fossil-fired power plants.

In conclusion, the continued decline in clean energy costs in 2025 is driven by technological advancements, economies of scale, policy support, supply chain development, and innovation. This trend has made renewable power increasingly competitive with fossil fuel alternatives, leading to improved energy security and enhanced emissions reduction efforts. Government policies and industrial strategies play a crucial role in facilitating the growth of clean energy technologies and the decline in their costs, with major economies implementing various policies to support the clean energy transition.