IRENA: Renewables saved $480B in fossil fuel costs in 2025

The International Renewable Energy Agency released its annual cost analysis on Wednesday, finding that renewable energy projects helped avoid an estimated $480 billion in fossil fuel costs and approximately 8.4 gigatonnes of carbon dioxide emissions in 2025, as the price gap between clean and conventional power generation continued to widen.downtoearth+2

Record Capacity, Falling Costs

The report, titled "Renewable Power Generation Costs in 2025," found that more than 90 percent of newly commissioned utility-scale renewable capacity generated electricity at a lower cost than the cheapest new fossil fuel alternative. Global renewable capacity additions reached 692 GW in 2025, the largest single-year expansion on record, with solar PV accounting for 510 GW and wind power adding 159 GW.pv-magazine-usa+2

Solar PV's levelized cost of electricity held steady at $44 per MWh, while onshore wind declined 4 percent to $33/MWh and offshore wind fell 3 percent to $78/MWh. Gas-fired power moved in the opposite direction, with turbine shortages nearly doubling the capital cost of new combined-cycle gas plants in the United States and generation costs approaching $100/MWh in markets such as Italy, Germany and Japan.downtoearth

Geopolitical Shield

IRENA framed renewables as a buffer against energy price shocks. Across 20 major economies accounting for roughly four-fifths of global renewable electricity generation, renewable power avoided an estimated $377 billion in fossil fuel purchases during 2025. China led with $177 billion in savings, followed by the United States at $35 billion, Brazil at $32 billion, India at $18 billion, Germany at $18 billion and Japan at $15 billion.downtoearth

"Every additional megawatt of renewables strengthens economic protection against fuel price volatility, shielding consumers, businesses and public finances from higher costs," said IRENA Director General Francesco La Camera.downtoearth

Emerging Pressures

Despite the cost advantage, the report flagged headwinds. Clean technology manufacturing investment has fallen by half from a quarterly peak of $70 billion in 2023 to around $35 billion by late 2025, while rising commodity prices and shifting trade policies are expected to push up installed costs during 2026. Financing costs now account for 56 percent of variations in project economics across markets — more than twice the influence of technology costs — posing a particular barrier for developing economies.downtoearth