Installed renewable energy sources helped curb fossil fuel costs by an estimated $480 billion in 2025 as the cost advantage between clean energy and conventional sources of energy continues to widen, according to the International Renewable Energy Agency (IRENA).

Titled ‘The Renewable Power Generation Costs in 2025’, the report estimated that over 90% of the utility-scale renewable capacity added in 2025 was cheaper than the lowest-cost new fossil alternative.

As the Middle East conflict continues to disrupt global energy pipelines, the renewable energy sector has emerged as a geopolitical shock absorber against fossil-sensitive systems in the energy crisis, the report stated.

Low renewable power prices gave the clean energy sector an edge over fossil fuels. At $44 MWh, solar PV power stood strong at 2024’s price levels in 2025 too. Meanwhile, wind energy prices continued to dip — onshore wind at $33/MWh and offshore wind at 78/MWh.

Since 2010, the cost of solar PV power has declined by 89%, concentrating solar by 72%, onshore wind by 71% and offshore wind by 63%.

On the other hand, new gas-fired power generation was hit hard due to a turbine shortage, which nearly doubled the cost of running a new combined-cycle plant in the U.S., while costs shot up to $100/MWh in markets such as Japan, Italy and Germany. The report stated that the uncertainty over the Middle East crisis is likely to push gas prices throughout 2026.

The report stated that in Southeast Asian economies like the Philippines, Thailand and Indonesia, which are exposed to energy imports, the existing renewable energy stockpiles curbed coal and gas purchases by around $5.7 billion in 2025.

Experts at IRENA studied 20 major economies that accounted for about four-fifths of the world’s renewable generation and found that, collectively, they saved $377 billion in fossil fuel purchases by opting for renewable power in 2025.

The report also sheds light on how the economic advantages of clean energy power go beyond electricity generation costs. The geographical distribution of these benefits mirrors the spread of renewable energy capacity worldwide. In tandem with the size of its clean energy fleet, China alone accounted for $177 billion, roughly half of all the cost savings, followed by USA ($35 billion), India and Germany ($18 billion) and Japan ($15 billion).

IRENA attributes the shift in the global energy supply mix to a massive expansion of manufacturing capacity, especially in China, leading to a competitive ecosystem thriving on thin margins and prices cutting close to production costs.

In the first quarter of 2026, China expanded its solar power capacity by 41.4 GW. The country’s cumulative installed power generation crossed 3,960 GW by March 2026, marking a 15% year-on-year increase, according to data from the National Energy Agency. China has set a target of 3.6 TW solar and wind energy capacity by 2035.

IRENA’s outlook suggests that costs will continue to decline to 2035, though far more slowly than before.

The report noted that even as clean tech investments were dropping, from $70 billion in 2023 to $35 billion by the end of 2025, commodity and component costs were on the rise globally. The volatility of the trade and tariff landscape, combined with these developments, is likely to push total installed costs in 2025. However, IRENA suggests that costs will continue to decline to 2035, though far more slowly than before.

In April, IRENA proposed removing or reducing tariff and non-tariff barriers on imported renewable energy equipment for the short-term, amid the growing disruptions in fuel markets due to the Middle East conflict.