Solar PV and Onshore Wind Lead Global Cost Competitiveness as LCOE Falls, Wood Mackenzie Reports
The global levelised cost of electricity (LCOE) continues to reflect significant progress in renewable energy technologies, with solar photovoltaic (PV) maintaining its position as the world’s most cost-competitive power source through 2025. Single-axis tracker systems in the Middle East and Africa are leading at just US$37 per megawatt-hour (MWh), according to Wood Mackenzie. Ongoing improvements in module efficiency and stabilisation of supply chains are expected to drive further cost reductions worldwide.
“Across all regions, renewable technologies demonstrate clear cost advantages over conventional generation. We expect continued cost reductions through technological improvements, supply chain optimisation, and economies of scale, reinforcing renewables’ position as the dominant global power generation technology,” said Amhed Jameel Abdullah, senior research analyst at Wood Mackenzie.
Asia Pacific
In Asia Pacific (APAC), utility-scale solar PV continues to deliver the lowest generation costs, ranging from US$27/MWh in China to US$118/MWh in Japan by 2025. Onshore wind is also highly competitive, with China, India, and Vietnam achieving costs of US$25–70/MWh. Hybrid solar-plus-battery systems are gaining traction as battery costs decline, with Australia using storage to stabilise solar output and India driving hybrid systems toward grid parity. China remains a global leader in low-cost energy storage, supported by strong supplier competition. Offshore wind costs vary, with China showing promising merchant revenue potential, while other markets face higher costs into the early 2030s.
Europe
Europe’s renewable LCOE fell 7% in 2025. Utility-scale solar PV with single-axis tracking offers the lowest average LCOE, while declining module prices contributed to a 10% reduction from 2024. Onshore wind LCOE is projected to fall 16% through 2030, though offshore wind costs are expected to rise in the early 2030s due to supply chain constraints. Utility-scale battery storage costs are projected to fall below US$100/MWh by 2026, declining another 35% by 2060. Commercial distributed PV LCOE is expected to drop nearly 50% over the same period.
North America
In North America, renewable energy costs are forecast to decline through 2060 despite short-term challenges, such as US tariffs and the phaseout of investment tax credits. Onshore wind LCOE may rise by 24% after 2030 due to tax credit expirations, although long-term merchant revenue prospects remain strong. Offshore wind costs remain high due to policy uncertainty and project delays. Gas turbine capital and fuel costs are increasing amid rising electricity demand, especially from AI and data centers. Low-carbon dispatchable technologies, including small modular reactors and enhanced geothermal, remain more expensive but offer critical system flexibility.
Latin America
Renewable LCOE in Latin America has dropped 23% between 2020 and 2024, with commercial solar PV achieving the lowest average costs. Onshore wind LCOE is projected to fall 42% by 2060, while fixed-bottom offshore wind costs will drop 67% from 2025 levels. Battery storage LCOE is expected to decrease 24% by 2060 as markets and infrastructure mature.
Middle East and Africa
Wind and solar LCOEs across the Middle East and Africa fell 6–10% in 2025. Utility-scale solar PV remains the region’s most cost-effective source, with single-axis tracker PV projected to reach approximately US$17/MWh by 2060. Onshore wind is expected to stabilise around US$30/MWh, while utility-scale battery storage costs continue to decline steadily.
“Solar PV and onshore wind are emerging as the dominant low-cost options globally. Hybrid systems and battery storage are rapidly closing the competitiveness gap, signalling a new era for renewable energy deployment,” Abdullah concluded.
