In 2025, photovoltaics once again confirmed its dominance over global energy expansion, but the IRENA report introduces a crucial nuance: installing more no longer automatically equates to producing more cheaply.
The technology added a record 511 GW , bringing the total global capacity to approximately 2,392 GW . At the same time, the total installed cost of utility-scale projects fell by 6% year-on-year to $667/kW .
However, the global LCOE remained stable at 44 USD/MWh .
The explanation lies outside the module. The lower equipment costs were offset by higher financing costs and slightly lower capacity factors, a sign that renewable competitiveness is entering a stage less dependent on manufacturing and much more conditioned by financing, the grid, and market design.
This change also alters the hierarchy between regions, as China and India continue to convert industrial scale into cheaper electricity, while Europe and the United States lose some of that advantage in permits, connection, construction, inflation and cost of capital.
The result? A global market that shares technology, but not economics.
Solar power is leading the rollout, but its cost is no longer falling at the same rate.
Photovoltaics once again became the main protagonist of the global electricity expansion .
During 2025, a record 511 GW was added, raising the cumulative global capacity to approximately 2,392 GW . China accounted for nearly 315 GW, followed by India with 37 GW, and the United States with 34 GW.
The total installed cost of utility-scale projects fell 6% year-on-year to 667 USD/kW , and accumulated a reduction of 88% since 2010.
However, the global LCOE remained stable at 44 USD/MWh .
The drop in equipment and component prices was offset by a higher cost of capital and slightly lower capacity factors. The market is thus entering a phase of maturity in which lower module prices no longer guarantees, on its own, an equivalent reduction in the final price of electricity.
The projects launched in China and India had average installed costs of $533 and $545 USD/kW , respectively. Europe and the United States, on the other hand, faced higher costs for construction, financing, permits, and system balancing.
Same modules, very different economies
China not only leads in the volume of installations, but also exerts a decisive influence on the global average cost.
Excluding Chinese projects, the global LCOE for solar increases from 44 to 55 USD/MWh , a jump of 23%. For onshore wind, the difference is even greater: the average rises from 33 to 51 USD/MWh when China is removed from the calculation.
The country maintains a structural advantage based on its manufacturing capacity, proximity between suppliers, access to cheaper components, and the scale of its domestic market.
Europe is moving in the opposite direction.
Permit delays extend timelines and increase financial costs. Network bottlenecks delay the commissioning of existing assets or limit the capacity of new projects. These are compounded by higher labor, logistics, and engineering costs.
The result is that the reduction in the international price of the modules is diluted before reaching the LCOE.
The divergence is no longer primarily explained by the quality of the solar resource. Europe recorded an average cost of 59 USD/MWh, compared to 36 USD/MWh in China, even though both markets have access to similar photovoltaic technologies.
Batteries become the new solar advantage
In 2025, around 25% of new large-scale solar capacity was installed in conjunction with batteries.
Co-location addresses a growing problem. The more photovoltaics are integrated into the grid, the greater the concentration of production during peak hours. This increases energy exports, reduces wholesale prices, and leaves grid connection points underutilized for extended periods.
Batteries allow some of that production to be shifted to periods of higher demand and higher prices. They also help to smooth out ramps, improve predictability, and make more efficient use of the grid infrastructure.
The economy of this configuration took a leap during 2025.
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The installed cost of a four-hour utility-scale battery fell by almost 30% in a single year , to approximately $140/kWh . Since 2010, the cumulative reduction has reached around 95%.
In the best locations, the LCOE of solar systems with storage capable of delivering electricity with 95% reliability was below 85 USD/MWh .
Onshore wind power retains its price leadership
Although solar dominated new capacity additions, onshore wind remained the cheapest source of next-generation power.
Its global LCOE fell to 33 USD/MWh , compared to 44 USD/MWh for photovoltaics and 78 USD/MWh for offshore wind.
The technology also saw a record deployment, with nearly 150 GW installed , of which approximately 113 GW were in China.
The country once again set the world minimum, with an onshore wind LCOE of 27 USD/MWh .
The concentration is striking: China accounted for roughly three-quarters of the world's new wind power capacity. Without that market, the average global cost of the technology would have reached $51/MWh.
Onshore wind power thus retains the crown of lowest cost, but its expansion increasingly depends on a handful of markets capable of combining scale, network and financing.
Dispatchable renewables are rising, but gaining systemic value
The behavior of dispatchable technologies was different.
The LCOE of hydroelectric power increased to 62 USD/MWh , that of geothermal power reached 89 USD/MWh , and that of concentrated solar power reached 115 USD/MWh .
IRENA attributes these increases mainly to lower levels of production and capacity factors, not to a general increase in the cost of technology.
Bioenergy was the exception, with a reduction to 86 USD/MWh thanks to improved operational performance.
These values place them above onshore photovoltaics and wind power in a strict cost comparison. However, their function in the system is different.
Hydropower, geothermal, and CSP with storage can provide controllable generation, stability, backup, and flexibility during periods without sun or wind.
As the share of variable technologies grows, their value is no longer measured solely by the average price per megawatt-hour. Their ability to respond during critical times, maintain frequency, and reduce the need for backup fossil fuel generation is also a factor.
From cheap source to economic shield
The report also places renewables in a context that goes beyond the climate transition.
During 2025, renewable generation avoided an estimated $480 billion in fossil fuel expenditure and around 8.4 gigatons of CO₂ emissions .
The savings correspond to coal and gas that did not need to be purchased, transported, or imported.
This effect became especially relevant during the energy crisis associated with the Strait of Hormuz in early 2026.
IRENA is analyzing the case of Indonesia, Thailand, and the Philippines, three economies heavily reliant on imports. Their renewable energy sector avoided approximately $5.7 billion in coal and gas purchases during 2025.
Valued at the highest prices recorded during the Middle East crisis between March and May 2026, those same volumes would have represented a savings of $6.5 billion .
With double the renewable generation, the avoided fossil fuel bill would have reached 12.9 billion .
Renewable energy thus acts as a geopolitical buffer.
Once built, it reduces exposure to external producers, sensitive shipping routes, and abrupt variations in international fuel markets.
This value is not fully reflected in the LCOE, but it translates into less economic vulnerability, greater price stability, and a more protected trade balance.