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.
The Driving Forces Behind the Cost Decline
Onshore wind power has undergone a remarkable transformation, with costs plummeting by 69% between 2010 and 2022. This dramatic price drop is not just a statistic—it’s a game-changer for businesses, investors, and policymakers looking to capitalize on the renewable energy revolution.
Several key factors have driven this shift. Advances in turbine technology, streamlined manufacturing, and economies of scale have all played a crucial role in making wind energy more affordable. Improved logistics, better materials, and smarter grid integration have further contributed to reducing operational and maintenance expenses.
This shift isn’t just about making energy cleaner—it’s about making it more profitable. Businesses that embrace onshore wind now are positioning themselves for long-term cost savings and energy independence.
3. Offshore wind energy prices decreased by 60% from 2010 to 2022.
A Remarkable Drop That Signals a Green Business Opportunity
The cost of offshore wind energy has plummeted by an astonishing 60% over the last decade, opening up a world of opportunities for businesses looking to transition to sustainable energy.
This price shift isn’t just a result of market fluctuations—it’s a testament to technological advancements, economies of scale, and government incentives designed to drive the adoption of renewable energy.
For businesses, this is more than just a statistic. It represents a real chance to cut long-term operational costs, enhance sustainability efforts, and even unlock new revenue streams.
But how did offshore wind become so affordable? More importantly, how can companies leverage this trend for financial and strategic gains?
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.
Why Battery Cost Declines Are a Game-Changer for Renewable Energy
The steep decline in battery storage costs is one of the most significant breakthroughs in making renewable energy a mainstream power source.
For years, the biggest challenge with solar and wind energy was their inconsistency—solar panels don’t generate power at night, and wind turbines are useless on a still day.
Battery storage changes everything. By allowing excess energy to be stored and used when needed, businesses can finally rely on renewables without worrying about fluctuations in supply.
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.
Why Businesses Should Pay Attention
For businesses looking to optimize costs, future-proof operations, and meet sustainability goals, the fact that wind and solar are now the cheapest sources of new power generation in over 60% of the world is a game-changer.
This isn’t just a statistic—it’s a wake-up call. Traditional energy sources like coal and natural gas are losing their cost advantage, and companies that fail to adapt may find themselves struggling with higher energy expenses and regulatory challenges.
Forward-thinking businesses are already making the shift. The declining costs of renewables mean that companies can lock in low energy prices, hedge against fuel price volatility, and enhance their ESG (Environmental, Social, and Governance) credentials, which are increasingly important to investors and customers alike.
9. In 2021, renewable energy projects had lower costs than fossil fuel-based energy in 99% of new capacity additions.
A Paradigm Shift in Energy Economics
The year 2021 marked a turning point in the energy industry. Renewable energy was no longer just an ethical or environmental choice—it became the most cost-effective option for nearly all new power capacity installations.
Businesses that once hesitated to transition due to high costs now faced an undeniable economic advantage.
Fossil fuels, once the default choice for reliability and affordability, struggled to compete. With advancements in solar, wind, and battery storage, clean energy projects consistently undercut traditional energy sources in price.
This shift wasn’t just a temporary trend—it signaled the future of energy investments.
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.
Understanding Why Nuclear Energy Remains Expensive
While nuclear power has long been a stable energy source, its cost remains significantly higher than many renewable options. At around $0.13–$0.16 per kWh, nuclear electricity is priced well above wind and solar, which can drop below $0.03 per kWh in some regions. But why is nuclear still so expensive?
First, nuclear plants require massive upfront investments—often exceeding $6 billion per reactor. These projects frequently experience construction delays and budget overruns, leading to higher long-term costs.
Regulatory compliance, safety measures, and waste disposal further add to the financial burden. Even after a plant is built, ongoing operational costs, including maintenance, fuel, and security, remain high.
For businesses looking for affordable and predictable energy prices, nuclear’s financial unpredictability presents a challenge. Unlike wind and solar, which see declining costs due to technological advancements, nuclear has shown little to no reduction in expenses over the past few decades.
12. Coal power costs remained stable around $0.05–$0.15 per kWh, but renewables have consistently undercut it.
A Shifting Energy Landscape
For decades, coal power was the backbone of global energy production, offering relatively stable and predictable costs. Hovering between $0.05 and $0.15 per kWh, coal remained a go-to source for many industries and utility companies looking for reliability.
However, this stability has not shielded it from an emerging reality: renewables are outpacing coal on price, scalability, and long-term financial viability.
Why Renewables Are Pulling Ahead on Cost
The continuous decline in renewable energy costs is not just a temporary trend—it’s a fundamental shift. Wind and solar, in particular, have reached price levels that make them the most attractive options for new energy investments.
Several factors drive this:
- Technology advancements: Solar panels and wind turbines are becoming more efficient, producing more energy at lower costs.
- Mass production and economies of scale: Increased global adoption of renewables has led to cheaper production and installation costs.
- Government incentives and policy shifts: Many governments offer subsidies, tax incentives, and policy mandates favoring clean energy.
- Falling storage costs: Battery storage solutions are becoming more affordable, reducing reliance on fossil fuel backups.
13. Gas-fired power generation has a variable cost between $0.04–$0.12 per kWh, depending on fuel prices.
Gas-fired power generation remains a crucial part of the energy mix, especially as businesses navigate the transition to renewables. While costs fluctuate based on fuel prices, understanding the factors behind these variations can help businesses make informed energy decisions.
Why Gas Prices Affect Your Power Costs
Natural gas is a commodity, and its price is influenced by supply, demand, and geopolitical factors. When gas prices rise due to supply chain disruptions or increased global demand, the cost of gas-fired power generation follows suit.
On the other hand, when natural gas is abundant, electricity costs drop. Businesses relying on stable energy expenses should closely monitor market trends and explore hedging strategies to mitigate cost spikes.
How Efficiency Impacts Gas-Fired Power Prices
Not all gas-fired plants operate with the same level of efficiency. Newer, more advanced combined-cycle gas turbine (CCGT) plants can convert fuel into electricity at a much lower cost compared to older, less efficient plants.
If your business is tied to a power provider with outdated infrastructure, you may be paying more than necessary. It’s worth evaluating energy suppliers and negotiating contracts that reflect modern efficiencies.
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.
How Plummeting Battery Costs Unlock New Business Opportunities
The staggering drop in lithium-ion battery prices from $1,200 per kWh in 2010 to just $132 per kWh in 2022 is more than just a statistic—it’s a revolution. This price shift is reshaping industries, driving innovation, and unlocking enormous opportunities for businesses that rely on or invest in renewable energy.
Affordable energy storage is the missing piece that makes solar and wind power not just viable but dominant. As battery costs decline, businesses can take advantage of more consistent, cost-effective, and scalable renewable energy solutions.
Whether you operate a manufacturing facility, a retail chain, or a data center, understanding this shift is critical for long-term cost savings and sustainability.
15. In 2022, 62% of newly installed renewable power was cheaper than the cheapest fossil fuel alternatives.
In 2022, 62% of Newly Installed Renewable Power Was Cheaper Than the Cheapest Fossil Fuel Alternatives
For companies looking to cut costs and improve their bottom line, this shift is a game-changer. Energy costs are one of the biggest expenses for businesses, and with renewables now consistently outpricing fossil fuels, companies that make the transition stand to gain a competitive advantage.
Lower energy costs mean improved profit margins, the ability to reinvest in growth, and a stronger position in industries where sustainability is becoming a major differentiator.
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.
What’s Driving the Drop in Wind Turbine Prices?
The cost of wind turbines has fallen significantly over the past decade, and this isn’t just a random market fluctuation. Several strategic forces are at play, making wind power more affordable for businesses looking to invest in renewable energy.
Advancements in manufacturing, increased competition, and economies of scale have all played a critical role. Turbine manufacturers are streamlining production, using better materials, and integrating new technology that enhances efficiency while reducing costs.
As demand for wind energy grows, the industry has matured, leading to more efficient supply chains and lower raw material costs.
For businesses, this means a significant reduction in the upfront capital investment required to generate wind power. If you’ve considered shifting to wind energy, now is an excellent time to explore options.
29. Hydropower remains one of the cheapest energy sources at around $0.02–$0.05/kWh, though growth is limited by geography.
Why Hydropower Stands Out in the Cost Race
Hydropower remains one of the most affordable energy sources, consistently delivering electricity at around $0.02–$0.05 per kilowatt-hour.
Unlike solar and wind, which are subject to fluctuating weather conditions, hydropower provides steady, reliable energy. This stability makes it an attractive option for businesses seeking long-term energy cost predictability.
However, while cost efficiency is a major advantage, hydropower expansion faces a critical roadblock—geography. Unlike solar panels that can be installed on rooftops or wind turbines placed in open fields, hydropower relies on a consistent water source.
Rivers, dams, and reservoirs are essential, and not every region has access to them.
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.
