Nearly all new clean energy projects commissioned in 2024 outperformed fossil fuel alternatives in terms of cost, according to a report by the International Renewable Energy Agency, highlighting the growing clout of renewables even amid supply chain disruptions and grid constraints.
IRENA’s Renewable Power Generation Costs in 2024 report found that 91 percent of new renewable electricity capacity was more cost-effective than fossil fuels last year.
The average cost of onshore wind dropped to $0.034 per kilowatt-hour, making it the cheapest source of new electricity, followed by solar photovoltaics at $0.043/kWh, 41 percent cheaper than the lowest-cost fossil alternatives.
“New renewable power outcompetes fossil fuels on cost,” said IRENA Director-General Francesco La Camera, in a statement. “The transition to renewables is irreversible, but its pace and fairness depend on the choices we make today.”
Global Cost Savings and Energy Security Benefits
The deployment of 582 gigawatts of renewable capacity in 2024 resulted in around $57 billion in avoided fossil fuel costs, according to IRENA. Beyond cost, renewables also enhanced energy security by reducing dependence on volatile international fuel markets.
Technological innovation, maturing supply chains, and economies of scale have helped drive down prices, positioning renewables as a cornerstone of long-term, affordable and sustainable energy.
“The fossil fuel age is crumbling,” said United Nations Secretary-General António Guterres in the statement. “Renewables are lighting the way to a world of affordable, abundant, and secure power for all.”
Mounting challenges in Integration and Financing
Despite cost gains, IRENA warned of mounting obstacles, particularly in grid integration and financing. Grid bottlenecks, slow permitting, and supply chain constraints are delaying projects in both advanced and emerging economies.
The report highlighted the Group of 20 nations and Global South markets, where electricity demand is increasing, but investment in grid infrastructure is lagging.
Financing remains a crucial factor in determining project viability. IRENA highlighted stark contrasts in capital costs across regions. While onshore wind generation costs were roughly equal in Europe and Africa at $0.052/kWh, African projects faced financing costs nearly three times higher. The assumed cost of capital ranged from 3.8 percent in Europe to 12 percent in Africa.
“Stable and predictable revenue frameworks are essential to reduce investment risk,” the agency said, citing the importance of instruments like power purchase agreements in attracting affordable capital.
Technology Reshape the Economics
Technological advances beyond the current generation are further strengthening the case for renewables. The cost of utility-scale battery energy storage systems fell by 93 percent since 2010, reaching $192/kWh in 2024. IRENA attributed the drop to scaled manufacturing, better materials and more efficient production.
Hybrid systems combining wind, solar, and battery storage, along with AI-driven digital tools, are enabling smarter grid integration.
However, the report warned that many emerging markets still lack the digital and physical infrastructure to fully benefit from these innovations.
While IRENA expects further cost declines in Asia, Africa, and South America due to stronger learning rates and untapped renewable potential, it warned that geopolitical uncertainty, trade tariffs and supply chain pressures could slow progress in North America and Europe.
To maintain momentum, IRENA called for stronger international cooperation, resilient supply chains, and policy frameworks that unlock private investment, particularly in capital-constrained regions.
