For solar photovoltaics (PV), fixed-axis systems average an LCOE of $66/MWh globally, within a wide range of $28–117/MWh. That reflects the influence of geography, technology advancements and regional market conditions, says Wood Mackenzie. Single-axis tracking PV systems fare slightly better, averaging $60/MWh, with a range of $31–$103/MWh, reinforcing their growing role in utility-scale projects.

In contrast, the analysis indicates onshore wind technology has a global average LCOE of $75/MWh, within an even wider range of $23–139/MWh. Offshore wind, particularly floating systems, remains expensive, notes the market analyst, with fixed installations averaging $230/MWh and floating systems at $320/MWh. These costs are forecast to fall over time but remain higher than onshore options.

Wood Mackenzie’ findings are broken down into five regions: Europe, North America, Latin America, the Asia-Pacific, and the Middle East/Africa.

Asia-Pacific

In 2024, the LCOE for renewable technologies like wind and solar in the Asia-Pacific region are reported to have decreased by 16%, driven by a 21% drop in capital costs. Solar PV remains the region’s cheapest generation option, with competitive pressure leading to significant reductions in project costs.  

Distributed PV also saw a cost reduction of 33%, reflecting market competition and improved module efficiencies for technologies such as tunnel oxide passivated contact (TOPCon) and heterojunction (HJT) solar cells.  

However, offshore wind remains a premium technology, with cost-competitiveness largely limited to China, while other markets continue to face high capex due to ongoing supply chain and inflationary pressures.

Europe

Europe almost no (0.2%) reduction in the average LCOE for renewables, despite a 9% decrease in installation costs from 2020 to 2023, due to the financial challenges of project funding, according to Wood Mackenzie. However, utility-scale solar PV in southern Europe leads the way, benefitting from significant declines in capital costs.  

Still, the analysis remains optimistic. ‘By 2060, renewable technologies [in Europe] could be up to 85% cheaper than fossil fuels, while sustained investment in dispatchable low-carbon technologies remains crucial to ensure grid stability as renewables expand.’

North America

Meanwhile, North America has experienced significant cost reductions for renewable energy technologies, with wind and solar leading the way. The renewable technologies’ LCOE declined by 4.6% this year, underpinned by a 4.2% drop in capital costs. By 2060, utility-scale solar LCOE is expected to have declined by an average of 60%, driven by advancements in cell technology and increased production capacity for key components like polysilicon.  

Onshore wind in the US is projected to see a 42% reduction in LCOE, underscoring the long-term competitiveness of renewables in the region. While offshore wind faces short-term cost pressures, it will see a significant LCOE reduction of up to 67% by 2060, suggests Wood Mackenzie.

Latin America

The average LCOE for renewables in Latin America decreased by 8%, driven by easing supply chain pressures and falling capital costs. Single-axis solar PV now boasts the region’s lowest LCOE, especially in mature markets like Brazil, Chile and Mexico. By 2060, renewables are projected to hold a 70% cost advantage over fossil fuels, highlighting their growing competitiveness. As a result, Brazil and Mexico are poised to see a rise in merchant market opportunities as declining solar and wind costs surpass electricity prices to create significant revenue potential.

Middle East and Africa

The Middle East and Africa region, meanwhile, is reported to be witnessing a notable reduction in LCOE for solar and wind projects, driven by a 13% decline in capital costs per kW. This decrease, spurred by stabilising supply chains, highlights solar PV’s position as the most cost-effective energy source in the region, says Wood Mackenzie. With Saudi Arabia and the United Arab Emirates benefitting from high solar irradiance, single-axis tracker solar PV emerges as the most attractive option for developers. It is forecast to reach a competitive LCOE of $19.70/MWh by 2060.

Reshaping energy markets

Ahmed Jameel Abdullah, Senior Research Analyst at Wood Mackenzie, predicts significant cost reductions for renewables across all regions by 2060.

He adds: ‘The rapid cost reductions across regions highlight not just the growing competitiveness of renewables, but the potential to fundamentally reshape energy markets, economies and even geopolitics. As renewable energy technologies mature and scale, the playing field for energy generation will shift decisively towards sustainability, efficiency and resilience.’