Solar & Wind Cheaper & Cheaper — New Report

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Why are solar power and wind power dominating new power installations? Because they’re cheaper.

The problem with some big purchases people make, and plenty of little purchases, is we look at the upfront cost of something instead of the long-term, lifetime cost. The good thing about purchases of big power plants is the buyers do try to figure out the long-term LCOE cost of the power plants before spending millions or billions of dollars. And what that research typically does is it tells them to buy solar and wind power plants.

Backing that up are the latest reports from Wood Mackenzie. These reports cover Levelised Cost of Electricity (LCOE) around the world. LCOE is basically telling you what the long-term cost of power plants are across different power sources and types of power plants. “Across regions, the cost competitiveness of these technologies shows significant variation, but overall, renewables are on a steady path towards outcompeting traditional fossil fuel sources,” notes Amhed Jameel Abdullah, senior research analyst at Wood Mackenzie.

“These findings underscore the accelerating competitiveness of renewable energy technologies globally, with significant cost reductions projected across all regions by 2060,” Abdullah adds. “The rapid cost reductions across regions highlight not just the growing competitiveness of renewables, but the potential to fundamentally reshape energy markets, economies, and even geopolitics. As renewable energy technologies mature and scale, the playing field for energy generation will shift decisively towards sustainability, efficiency, and resilience.

The report focuses on LCOE region by region. The regions are Europe, North America, Latin America, Asia Pacific (APAC), and the Middle East and Africa (MEA). Here are brief takeaways for each of those regions:

• APAC: Renewable energy LCOE has dropped 16% in 2024. Capital costs have dropped 21%. Distributed PV LCOE dropped 33%. “Solar PV remains the region’s cheapest generation option, with competitive pressure leading to significant reductions in project costs.”
• North America: Renewable energy LCOE has dropped by 4.6% in 2024. Capital costs have dropped 4.2%. However, like elsewhere, LCOE is expected to come down massively in coming years. “By 2060, utility-scale solar LCOE is expected to decline by an average of 60%, driven by advancements in cell technology, and increased production capacity for key components like polysilicon. Onshore wind in the U.S. is projected to see a 42% reduction in LCOE, underscoring the long-term competitiveness of renewables in the region. However, offshore wind faces short-term cost pressures but will see a significant LCOE reduction of up to 67% by 2060, highlighting its growing role in the future energy mix.”
• Europe: Renewable energy LCOE has dropped only 0.6% in Europe this year. However, “By 2060, renewable technologies could be up to 85% cheaper than fossil fuels, while sustained investment in dispatchable low-carbon technologies remains crucial to ensure grid stability as renewables expand.”
• Latin America: Renewable energy LCOE has dropped 8% thanks to “easing supply chain pressures and falling capital costs.” The lowest LCOE in the region comes from single-axis solar PV. That’s especially the case in more mature markets — Brazil, Chile, and Mexico. “By 2060, renewables are projected to hold a 70% cost advantage over fossil fuels, highlighting their growing competitiveness.” Let’s be honest — looking out to 2060, it seems there’s no point in even mentioning the fossil fuel “competition.” Fossil fuels will be long dead.
• MEA: This region has seen a 13% drop in capital costs for renewable energy technologies. Again, solar energy is already coming out the leader in this region. “With Saudi Arabia and the UAE benefiting from high solar irradiance, single-axis tracker solar PV emerges as the most attractive option for developers, set to reach a competitive LCOE of US$19.7/MWh by 2060.”

Renewable energy is winning. Because it’s cheaper. It’s as simple as that.

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