Renewables saved $480 billion in fossil fuel costs in 2025, according to the latest International Renewable Energy Agency (IRENA) report, highlighting another milestone in the global clean energy transition. The report reveals that renewable energy projects commissioned during the year generated electricity at significantly lower costs than fossil fuel alternatives, saving the global economy an estimated $480 billion in avoided fuel expenses. More than 90% of newly installed utility-scale renewable capacity produced cheaper electricity than the least expensive new fossil fuel power plants.

As geopolitical tensions, volatile gas prices, and energy security concerns continue to reshape global markets, the findings reinforce that renewable energy is no longer driven solely by environmental goals; it has become one of the world’s most economically competitive and strategically important sources of electricity.

Renewable Energy Is Now the Lowest-Cost Source of New Power

IRENA’s Renewable Power Generation Costs in 2025 report confirms that solar and wind technologies continue to outperform fossil fuel-based electricity generation on cost.

• Solar photovoltaic (PV) projects maintained an average global generation cost of $44 per megawatt-hour (MWh) in 2025.
• Onshore wind became even more competitive, declining by 4% to $33/MWh, while offshore wind costs fell by 3% to $78/MWh.

Meanwhile, fossil fuel generation became increasingly expensive.

• Gas-fired electricity costs approached $100/MWh in countries such as Germany, Italy, and Japan, driven by higher natural gas prices and supply constraints.

According to IRENA, these cost differences make renewable electricity not only cleaner but also the most financially attractive option for expanding power generation.

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How Renewables Protected Economies from Fuel Price Shocks

One of the report’s strongest findings is that renewables saved $480 billion in fossil fuel costs in 2025 by insulating countries from volatile international fuel markets.

Existing renewable power plants continued producing electricity regardless of fluctuations in coal, oil, or natural gas prices. This became particularly evident during the temporary disruption around the Strait of Hormuz in early 2026, when geopolitical tensions triggered another spike in global energy prices.

• Across Indonesia, Thailand, and the Philippines, renewable electricity generated during 2025 avoided approximately $5.7 billion in coal and gas imports.
• Had those same fuel volumes been purchased during the higher prices experienced between March and May 2026, the avoided costs would have increased to $6.5 billion.
• IRENA estimates that doubling renewable generation in these countries would have increased avoided fossil fuel expenses to nearly $12.9 billion.

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Which Countries Benefited the Most?

Among the world’s 20 largest renewable electricity producers, renewable power avoided an estimated $377 billion in fossil fuel purchases during 2025 alone. China recorded by far the largest savings, followed by several major economies that have rapidly expanded renewable energy over the past decade.

These savings highlight that investments in renewable infrastructure continue delivering economic returns long after construction is complete.

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Renewable Costs Continue Their Long-Term Decline

The remarkable cost reductions seen today are the result of more than a decade of technological innovation and manufacturing scale.

According to IRENA:

• Solar PV costs have fallen by 89% since 2010.
• Onshore wind costs have dropped by 71%.
• Offshore wind costs have declined by 63%.
• Concentrated Solar Power (CSP) costs have fallen by 72%.

The agency expects further cost reductions through 2035, projecting an additional 40% decline for solar PV and around 20% for onshore wind, although the pace of cost reductions is expected to moderate compared with the previous decade.

These long-term trends continue to improve the competitiveness of renewable energy across both developed and emerging markets.

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New Challenges Are Emerging

Although renewable technologies remain the cheapest option for new electricity generation, IRENA warns that the sector faces several emerging challenges.

Investment in clean technology manufacturing has slowed considerably, falling from a quarterly peak of $70 billion in 2023 to approximately $35 billion by the end of 2025. Rising prices for critical minerals, components, and equipment, along with evolving trade policies and tariffs, may increase project costs during 2026.

Financing has also become one of the industry’s biggest obstacles.

The report notes that macroeconomic conditions account for roughly 56% of financing cost differences, making affordable capital more influential than technology costs themselves. This is especially challenging for developing countries, where higher borrowing costs often delay renewable energy deployment despite abundant natural resources.

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Why Renewable Energy Is Central to Energy Security

The report concludes that renewables saved $480 billion in fossil fuel costs in 2025 because they provide far more than low-cost electricity; they also improve national energy security.

Unlike fossil fuels, renewable resources such as sunlight and wind are not exposed to international commodity price fluctuations, shipping disruptions, or geopolitical conflicts. Every new renewable power plant reduces dependence on imported fuels while improving price stability for households, businesses, and governments.

IRENA recommends accelerating investment in:

• Modern electricity grids capable of integrating higher shares of renewable energy.
• Battery storage systems to improve reliability.
• Greater system flexibility and smart grid technologies.
• Electrification of transport, buildings, and industry.
• Affordable financing for renewable projects, particularly in developing economies.

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The Road Ahead

The latest IRENA findings demonstrate that renewable energy has evolved from an environmental solution into a cornerstone of economic resilience. As climate change, geopolitical uncertainty, and rising fossil fuel costs continue to reshape global energy markets, expanding renewable capacity offers one of the most effective ways to strengthen energy security while lowering electricity costs.

With renewable technologies continuing to become more efficient and affordable, countries investing in clean energy today are positioning themselves for a more competitive, resilient, and sustainable future. The message from IRENA is clear: the global energy transition is no longer simply about reducing emissions; it is increasingly about protecting economies from rising fuel costs and ensuring long-term energy independence.

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Frequently Asked Questions

1. How much did renewable energy save in fossil fuel costs in 2025?

According to the International Renewable Energy Agency (IRENA), renewable energy projects commissioned in 2025 helped avoid approximately $480 billion in global fossil fuel costs. These savings came from replacing expensive coal and gas-fired electricity with lower-cost renewable power.

2. Why are renewable energy projects becoming cheaper than fossil fuels?

Renewable technologies such as solar PV and wind power have benefited from advances in manufacturing, larger production scales, improved efficiency, and lower operating costs. Unlike fossil fuel plants, renewable projects do not require continuous fuel purchases, making electricity generation significantly more cost-effective over their lifetime.

3. Which renewable technology is the cheapest source of electricity?

According to the IRENA report, onshore wind was the lowest-cost source of new electricity generation in 2025, with an average cost of $33 per megawatt-hour (MWh). It was followed by solar photovoltaic (PV) at $44/MWh, while offshore wind averaged $78/MWh.

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