What's Happening?
In 2025, renewable energy sources such as solar and wind power have become the most cost-effective options for new electricity generation, surpassing fossil fuels. According to a report by IRENA, the cost of solar photovoltaic (PV) remained stable at $44
per megawatt-hour (MWh), while onshore wind prices dropped to $33/MWh and offshore wind to $78/MWh. In contrast, the cost of new natural gas-fired generation increased significantly due to supply chain issues, with capital expenditure for new plants doubling. This shift has resulted in substantial savings, with countries like Indonesia, Thailand, and the Philippines avoiding $5.7 billion in fossil fuel costs in 2025. The global renewable capacity expanded by 692GW, marking a 15.5% increase from the previous year.
Why It's Important?
The transition to renewable energy is crucial for economic resilience and environmental sustainability. The declining costs of renewables provide a hedge against the volatility of fossil fuel prices, which have been exacerbated by geopolitical tensions, such as the conflict in the Middle East. This shift not only reduces energy costs for consumers and businesses but also contributes to significant reductions in carbon emissions, with 8.4 gigatonnes of CO2 avoided in 2025. The growing investment in renewables is a strategic move towards energy independence and a sustainable future, reducing reliance on fossil fuels and mitigating the impacts of climate change.
What's Next?
As renewable energy continues to outpace fossil fuels in cost efficiency, further investments in clean energy infrastructure are expected. Countries are likely to increase their renewable capacity to capitalize on cost savings and environmental benefits. Policymakers may implement supportive measures to accelerate the transition, while businesses could shift their energy strategies to incorporate more renewables. The ongoing development of renewable technologies and infrastructure will be critical in maintaining this momentum and achieving global climate goals.
