Solar and wind power kept getting cheaper in 2025, even as gas prices spiked around the globe. The gap between the two is now paying off in hard cash: renewable energy avoided an estimated $480 billion in fossil fuel costs last year, according to a new report from the International Renewable Energy Agency.
More than 90 percent of new utility-scale renewable projects built in 2025 generated power more cheaply than the newest fossil fuel plants could, IRENA found. That advantage held even as a global turbine shortage nearly doubled the cost of building new gas plants in the United States.
Solar photovoltaic power cost $44 per megawatt-hour in 2025, unchanged from the year before. Onshore wind fell 4 percent to $33 per megawatt-hour. Offshore wind dropped 3 percent to $78.
Gas told a different story. Turbine shortages pushed the capital cost of new combined-cycle gas plants toward $2,400 per kilowatt in the U.S. In high-cost markets like Italy, Germany, and Japan, gas-fired electricity approached $100 per megawatt-hour.
“The decline in renewable energy costs is delivering a powerful economic dividend,” said Francesco La Camera, director general of IRENA. “Expanding renewable capacity is a strategic investment in resilience and competitiveness.”
A shock absorber during the Hormuz crisis
When the Strait of Hormuz closed in early 2026, energy import prices surged across Asia and Europe. Existing renewable power plants in Indonesia, Thailand, and the Philippines had already avoided $5.7 billion in coal and gas purchases in 2025.
Valued at the higher prices seen during the crisis, those same avoided fuel volumes would have been worth $6.5 billion. Had those countries doubled their renewable output beforehand, the savings would have hit $12.9 billion.
Across 20 major economies, representing roughly 80 percent of global renewable electricity generation, renewables avoided $377 billion in fossil fuel purchases in 2025. China saved the most, at $177 billion, followed by the United States at $35 billion, Brazil at $32 billion, and India and Germany at $18 billion each.
The cost curve is bending upward for a different reason now. Investment in clean-technology manufacturing has fallen by half since 2023, from a peak of $70 billion a quarter to $35 billion. China is consolidating its renewable manufacturing base, and component prices are climbing worldwide.
Financing, not technology, has become the bigger obstacle. National economic conditions — interest rates, inflation, sovereign risk — now explain 56 percent of the variation in financing costs, more than twice the share explained by technology itself. For developing economies trying to build renewable capacity, access to affordable capital is the real bottleneck.
What comes next
IRENA expects costs to keep falling through 2035, though more slowly than the past decade. Solar PV costs have dropped 89 percent since 2010; onshore wind, 71 percent; offshore wind, 63 percent. Over the next ten years, total installed costs are projected to fall another 40 percent for solar and 20 percent for onshore wind.
The agency is urging governments to invest faster in electricity grids, battery storage, and system flexibility — the infrastructure needed to absorb more renewable power. It also wants faster electrification of transport and industry, and cheaper financing for developing countries still locked out of the clean energy build-out.
The math is no longer close. Renewables are cheaper to run, and now they’re proving cheaper to weather a crisis with. The question left for 2026 is whether the money and the grids can keep up with the physics.
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