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Cost of renewables is forecast to continue falling globally, as China extends its manufacturing lead
19/2/2025
News
The cost of clean power technologies such as wind, solar and battery technologies is expected to fall by 2–11% in 2025, breaking last year’s previous cost reduction records, according to analyst BloombergNEF (BNEF). Meanwhile, China’s clean technology manufacturing capacity has led to rising protectionism in the form of import tariffs by countries hoping to prevent cheap imports upending their own energy markets. Trade barriers could temporarily stall cost declines, but BNEF still expects the levelised cost of electricity (LCOE) for clean technologies to fall 22–49% by 2035.
BNEF’s latest LCOE report suggests that ‘new wind and solar farms are already undercutting new coal and gas plants on production cost in almost every market globally’.
Its analysis indicates that the global benchmark cost for battery storage projects fell by a third in 2024 to $104/MWh, as a glut in supply due to slower electric vehicle sales than expected led to cheaper prices for battery packs. Meanwhile, the cost of a typical fixed-axis solar farm fell by 21% globally last year. Modules were sold at or below the cost of production, and there are no signs of the overcapacity in the solar supply chain easing in 2025. Batteries are expected to cross the $100/MWh watershed in 2025, while global benchmark costs for wind and solar generation are also set to fall 4% and 2%, respectively.
‘New solar plants, even without subsidies, are within touching distance of new US gas plants. This is remarkable because US gas prices are only a quarter of prevailing gas prices in Europe and Asia. It really raises the bar on what is possible even in the current market,’ comments Amar Vasdev, lead author of the report. ‘This opens up the likelihood that solar will become even more compelling in the coming years, especially if the US starts exporting liquefied natural gas and exposes its protected gas market to global price competition.’
China’s abundance of clean-tech manufacturing capacity was a key driver behind cost declines last year and has a major impact on project economics at home and abroad, reports BNEF. It says that, on average, the country can produce a MWh of electricity 11–64% cheaper than other markets. For example, it reports that power generated from onshore wind turbines costs around 24% less than the global benchmark of $38/MWh. While wind turbine prices in China have been falling, they have increased elsewhere since 2020. BNEF’s turbine price index shows component costs coming down again in 2025, but manufacturers are keeping prices high to improve margins.
Although clean power technologies have improved markedly over the last few decades, there is still room for further technological and economic efficiencies. By 2035, BNEF’s global benchmark LCOE falls 26% for onshore wind, 22% for offshore wind, 31% for fixed-axis PV and almost 50% for battery storage.
‘China is exporting green energy tech so cheaply that the rest of the world is thinking about erecting barriers to protect their own industries,’ concludes Matthias Kimmel, head of Energy Economics at BNEF. ‘But the overall trend in cost reductions is so strong that nobody, not even President Trump, will be able to halt it.’
