New Delhi: Renewable energy projects commissioned globally in 2025 helped avoid an estimated $480 billion in fossil fuel costs, according to a newly released report by the International Renewable Energy Agency (IRENA). The report, Renewable Power Generation Costs in 2025 reveals that more than 90 percent of newly added utility scale renewable capacity generated electricity at a lower cost than the cheapest new fossil fuel alternative, further strengthening the economic edge of clean energy.
The findings indicate that solar and wind fleets acted as critical financial buffers during intense geopolitical tensions and sudden gas price spikes, reinforcing their role as the cornerstone of global energy security and economic resilience. Francesco La Camera, Director General of IRENA, emphasized that the decline in renewable energy costs is delivering a powerful economic dividend, shielding consumers, businesses, and public finances from high fuel price volatility. He noted that the ongoing energy crisis demonstrates that expanding renewable capacity is a strategic investment in competitiveness and long term resilience.
According to the data, solar photovoltaic (PV) electricity costs remained steady at $44 per megawatt hour (MWh) in 2025, while onshore wind costs dropped 4 percent to $33/MWh and offshore wind fell 3 percent to $78/MWh. Conversely conventional power generation grew increasingly expensive. Turbine shortages nearly doubled the capital costs of new combined cycle gas plants in the United States, pushing generation costs close to $100/MWh in high price markets like Italy, Germany, and Japan, with renewed uncertainty in West Asia expected to keep gas prices elevated.
The report notes that the existing renewable fleet proved its worth as a financial buffer during major trade disruptions, such as the closure of the Strait of Hormuz in early 2026, which sent energy import prices surging across Asia and Europe. In Southeast Asia alone, existing renewables in Indonesia, Thailand, and the Philippines saved an estimated $5.7 billion in coal and gas purchases in 2025. Had renewable capacity in those regions been doubled, the avoided fuel costs would have reached $12.9 billion during the peak of the fuel crisis between March and May 2026.
On a broader scale renewable power across 20 major economies accounted for roughly $377 billion in avoided fossil fuel purchases in 2025. China led the global savings at $177 billion, followed by the United States at $35 billion, Brazil at $32 billion, India at $18 billion, Germany at $18 billion and Japan at $15 billion.
Despite this undeniable cost advantage, IRENA warns of emerging near term bottlenecks. Global investment in clean technology manufacturing has halved from its 2023 quarterly peak of $70 billion down to roughly $35 billion by the end of 2025. This slowdown driven by consolidation in China alongside rising global commodity and component prices, is expected to drive up installation costs throughout 2026. Furthermore high financing costs have surpassed technology costs as the primary obstacle to deployment particularly in emerging and developing economies where local macroeconomic conditions account for over half of the variation in capital costs.
To maintain momentum, IRENA urges accelerated investments in electricity grids, battery storage, and overall system flexibility to support deeper renewable penetration. The agency also underscored the critical need to fast-track the electrification of end-use sectors and improve access to affordable finance. While near-term supply chain pressures may slow the rapid cost deflations seen over the past decade which saw solar PV drop by 89 percent since 2010 IRENA still projects total installed costs to decline by roughly 40 percent for solar PV and 20 percent for onshore wind through 2035.