Renewable energy has been on a rollercoaster ride for the last two decades. What once seemed like an expensive, futuristic dream is now the cheapest source of electricity in many parts of the world. But how cheap is it really? What are the trends shaping the cost of solar, wind, and other green energy sources?
1. The global average cost of solar photovoltaic (PV) electricity fell by 89% from 2010 to 2022.
The sharp decline in solar power costs is one of the most significant shifts in the energy sector. Back in 2010, installing solar panels was expensive, and the return on investment took years. Today, technological advancements, mass production, and economies of scale have drastically reduced costs.
For homeowners, this means installing solar panels is now more affordable than ever. If you are thinking about switching to solar, check for government incentives that can lower your upfront costs even further.
Businesses can also benefit from tax credits and net metering programs, which allow them to sell excess electricity back to the grid.
2. Onshore wind energy costs dropped by 69% between 2010 and 2022.
Wind energy has also seen a dramatic cost reduction. In many windy regions, onshore wind is now the cheapest way to generate electricity. Modern wind turbines are more efficient, require less maintenance, and have longer lifespans.
If you are a business or government entity looking for long-term, stable electricity prices, investing in wind energy could be a strategic move. For landowners, leasing land for wind turbines can also provide a steady income stream.
3. Offshore wind energy prices decreased by 60% from 2010 to 2022.
Offshore wind used to be significantly more expensive than onshore wind due to high installation and maintenance costs. However, new technologies and larger turbines have brought costs down, making offshore wind a viable option for coastal regions.
Countries like the UK and Denmark have led the way in offshore wind development, proving that large-scale projects can be both cost-effective and efficient. If you live in a coastal region, expect to see more offshore wind farms in the coming years.
4. The levelized cost of electricity (LCOE) for solar PV fell from $0.39/kWh in 2010 to around $0.04/kWh in 2022.
The levelized cost of electricity (LCOE) measures the total cost of producing electricity over a system’s lifetime. A decade ago, solar PV was one of the most expensive energy sources. Today, it is among the cheapest.
For businesses and homeowners, this means solar is no longer just an environmentally friendly choice—it is an economically smart one. If you are considering solar, check if your electricity provider offers time-of-use rates, which can further increase your savings.
5. The LCOE for onshore wind dropped from $0.09/kWh in 2010 to about $0.03/kWh in 2022.
Onshore wind energy has become one of the most competitive energy sources. This price drop has been driven by improvements in turbine technology, better materials, and economies of scale.
If you are a utility company or an investor, onshore wind projects offer a strong return on investment with relatively low operational costs. For governments, supporting wind power can lead to energy independence and long-term price stability.
6. Battery storage costs fell by 85% between 2010 and 2022, making renewable energy more viable.
One of the biggest challenges of renewable energy is intermittency. The sun does not always shine, and the wind does not always blow. However, the sharp drop in battery storage costs is solving this problem.
With affordable battery storage, homeowners and businesses can store excess solar or wind energy and use it when needed. If you are planning a renewable energy installation, consider adding battery storage to maximize your energy independence.
7. The cost of utility-scale solar PV reached $0.02–$0.05 per kWh in competitive markets.
Utility-scale solar projects, which generate electricity for entire communities or cities, are now cheaper than coal and natural gas in many parts of the world. These projects benefit from large-scale production, making solar a dominant energy source.
For governments and energy planners, this means it is now possible to phase out fossil fuels without increasing electricity prices. If you are an investor, large-scale solar projects offer a promising opportunity.
8. Wind and solar are now the cheapest sources of new power generation in over 60% of the world.
In many regions, building new wind and solar plants is cheaper than running existing coal and gas plants. This is a game-changer for the energy market.
If you are a business looking to reduce costs, switching to renewable energy through corporate power purchase agreements (PPAs) can lock in lower prices for decades. For governments, investing in renewables means lower energy costs for citizens and businesses alike.
9. In 2021, renewable energy projects had lower costs than fossil fuel-based energy in 99% of new capacity additions.
The majority of new power projects worldwide are now renewable. Fossil fuel plants are becoming economically unviable compared to solar and wind.
If you are a decision-maker in the energy sector, it is time to shift focus toward renewables. Homeowners can also take advantage of this trend by choosing green energy providers where available.
10. The cost of offshore wind projects decreased from $0.16/kWh in 2010 to around $0.08/kWh in 2022.
Offshore wind farms have become more competitive due to larger turbines, improved installation techniques, and better financing options.
If you live in a coastal city, you may soon see offshore wind powering your local grid. Investors should also consider offshore wind as a growing sector with strong potential.
11. The cost of nuclear energy has remained high, around $0.13–$0.16 per kWh, making renewables a cheaper option.
While nuclear power offers stable energy output, its high costs and long construction times make it less competitive compared to renewables.
If you are considering investments in energy, renewables provide a lower-cost alternative with faster deployment timelines.
12. Coal power costs remained stable around $0.05–$0.15 per kWh, but renewables have consistently undercut it.
Coal was once the cheapest power source, but solar and wind have overtaken it in most markets. Governments should consider retiring old coal plants in favor of cleaner, cheaper alternatives
13. Gas-fired power generation has a variable cost between $0.04–$0.12 per kWh, depending on fuel prices.
Unlike renewables, gas prices fluctuate based on global markets. This makes wind and solar more attractive for long-term energy planning.
14. The price of lithium-ion batteries, crucial for solar and wind storage, fell from $1,200 per kWh in 2010 to $132 per kWh in 2022.
The affordability of batteries is making off-grid solar and wind solutions more practical for homes and businesses.
15. In 2022, 62% of newly installed renewable power was cheaper than the cheapest fossil fuel alternatives.
This trend indicates that renewables are not just competitive—they are dominant in new energy investments.
16. The cost of green hydrogen production is expected to fall by 50% by 2030, making it more competitive.
Green hydrogen, produced using renewable energy, is emerging as a clean alternative to fossil fuels, especially for industries that are hard to electrify, such as steelmaking and long-haul transport. However, it has been historically expensive due to the high cost of electrolysis and electricity.
With renewable energy becoming cheaper and electrolysis technology improving, green hydrogen is expected to become cost-competitive with natural gas by 2030.
Governments worldwide are investing heavily in hydrogen infrastructure, and businesses should start exploring its potential applications. If you are in an industry that requires high heat or chemical processes, green hydrogen could soon become a viable alternative to fossil fuels.
17. Global investments in renewable energy exceeded $500 billion in 2022, driven by cost reductions.
The declining cost of renewable energy has attracted massive investment from governments, corporations, and financial institutions. In 2022 alone, more than half a trillion dollars was invested in new wind, solar, battery storage, and green hydrogen projects.
If you are an investor, this trend highlights the enormous opportunities in the renewable energy sector. Businesses should also take note, as the growing investment means increased availability of funding, better financing options for renewable projects, and a stronger push toward sustainability from financial markets.
18. The LCOE of concentrating solar power (CSP) has dropped by 47% from 2010 to 2022.
Concentrating Solar Power (CSP) is a lesser-known but powerful renewable energy technology. Unlike regular solar panels, CSP uses mirrors to concentrate sunlight onto a receiver, which generates heat and produces electricity.
One key advantage of CSP is its ability to store heat for use when the sun is not shining.
The cost of CSP has decreased significantly due to improvements in mirror technology, thermal storage, and plant efficiency. If you are a policymaker or investor, CSP could be a strategic addition to your energy mix, particularly in sunny regions with high electricity demand during the evening hours.
19. The average auction price for large-scale solar projects in India fell below $0.03/kWh, making it among the cheapest in the world.
India has become one of the global leaders in low-cost solar power. Large-scale auctions for solar projects have pushed prices down to record lows, making solar the cheapest source of electricity in the country.
For businesses and industries operating in India, this means lower energy costs and increased opportunities for sustainable growth. Other countries can learn from India’s successful auction-based model to drive down costs and accelerate renewable energy adoption.
20. In the U.S., the unsubsidized LCOE of solar PV is now cheaper than new coal or gas plants in most states.
Even without government subsidies, solar power is now the most cost-effective source of new electricity generation in the United States. In states with high solar potential, like California, Texas, and Arizona, solar power plants are being built at record-low costs.
For homeowners, this means rooftop solar is an increasingly smart investment. Businesses should also consider solar PPAs (Power Purchase Agreements) to lock in low-cost electricity for the long term.
21. Wind power PPAs (Power Purchase Agreements) in the U.S. have seen prices as low as $0.02/kWh in prime wind locations.
Power Purchase Agreements (PPAs) allow businesses to buy electricity directly from renewable energy developers at fixed, long-term prices. In areas with strong wind resources, such as the Midwest and Texas, wind PPAs have reached record lows.
For companies looking to reduce costs and carbon footprints, signing a wind PPA can provide significant financial and environmental benefits. This is particularly attractive for corporations with sustainability targets.
22. The cost of residential rooftop solar in the U.S. fell by around 64% from 2010 to 2022.
The cost of installing solar panels on homes has dropped significantly due to improved technology, better financing options, and increased competition among solar providers.
For homeowners, this is a golden opportunity to go solar. Many states offer tax incentives, rebates, and net metering programs, making it easier to recoup the investment. If you own a home with good sun exposure, installing solar panels can lead to thousands of dollars in savings over the lifetime of the system.
23. Offshore wind auctions in Europe have resulted in prices below $0.06/kWh, down from $0.15/kWh a decade ago.
European countries have been leaders in offshore wind development, and their efforts have paid off. Competitive bidding in offshore wind auctions has driven prices down dramatically, making it a viable alternative to fossil fuels.
Governments in other regions can follow Europe’s example by holding competitive auctions, offering stable policy frameworks, and supporting offshore wind supply chains. If you are an investor, offshore wind presents a rapidly growing opportunity.
24. The cost of utility-scale solar-plus-storage has fallen to $0.06–$0.08/kWh, making it competitive with fossil fuels.
One of the biggest challenges of solar power is its variability. However, with battery storage becoming more affordable, solar-plus-storage systems can now provide reliable, around-the-clock electricity.
For utilities and large businesses, this means solar energy can now replace fossil fuel power plants even in areas with less sunlight. If you are considering solar for your home or business, adding battery storage can further increase energy savings and reduce reliance on the grid.
25. Renewable energy curtailment (excess energy wasted due to grid constraints) remains a challenge but costs are offset by low generation costs.
As renewable energy adoption grows, some regions are facing challenges in integrating solar and wind into the grid. When there is more energy production than demand, some renewable energy must be curtailed (i.e., wasted).
However, since the cost of generating renewable energy is so low, even some curtailment does not make it financially unviable.
To maximize renewable energy usage, governments should invest in smarter grids, better transmission infrastructure, and energy storage solutions. Businesses and homeowners can also take advantage of demand response programs to use energy when it is most available.
26. Investment in renewable energy R&D has led to an annual 5-10% efficiency improvement in solar panels.
Solar panel technology is improving rapidly. Every year, new research leads to better efficiency, meaning solar panels generate more electricity from the same amount of sunlight.
For homeowners and businesses, this means waiting too long to install solar may not be necessary—new panels will always be slightly better, but today’s technology is already highly efficient and cost-effective.
27. Floating solar PV installations have reduced costs by 20-30% compared to land-based installations in some regions.
Floating solar, where panels are installed on water bodies, is gaining popularity because it reduces land use conflicts and provides cooling benefits that improve efficiency.
Governments and businesses with access to reservoirs, lakes, or even offshore areas should explore floating solar as an option for expanding renewable energy capacity.
28. The global wind turbine market has seen a 45% decrease in turbine prices per MW since 2010.
Wind turbines are becoming more efficient and cost-effective due to advancements in blade design, materials, and manufacturing processes.
For wind farm developers, this means higher profitability and shorter payback periods. If you are an investor, the wind energy sector remains a strong bet for future growth.
29. Hydropower remains one of the cheapest energy sources at around $0.02–$0.05/kWh, though growth is limited by geography.
Hydropower is a mature, low-cost renewable energy source, but its expansion is limited by geography. Most of the best hydropower sites have already been developed.
Governments should focus on modernizing existing hydropower plants and integrating them with solar and wind for a more flexible energy grid.
30. The cost of integrating renewables into existing power grids is decreasing due to smarter grid technologies and storage advancements.
With better grid management, energy storage, and demand response technologies, integrating renewable energy into the power grid is becoming easier and more cost-effective.
For policymakers, prioritizing grid modernization will ensure that renewable energy growth continues without reliability concerns. Businesses should also explore smart energy management systems to optimize energy use.
wrapping it up
The cost of renewable energy has fallen dramatically over the past decade, making it the most competitive and cost-effective source of electricity in many parts of the world.
From solar and wind to battery storage and green hydrogen, technological advancements and economies of scale have driven prices down to levels that were once unimaginable.
