Solar increasingly beating even cheapest fossil fuels on price, IRENA study finds

Facebook
Twitter
LinkedIn
Reddit
Email
A solar installation brought forward by German utility EnBW. Image: EnBW.

The amount of renewable energy that came in cheaper than the most competitive fossil fuel option doubled last year, according to new analysis from the International Renewable Energy Agency (IRENA).

In total, 62% (162GW) of renewable power added last year was developed at a price lower than the cheapest fossil fuels, driven by the falling cost of renewable technologies. The Renewable Power Generation Costs in 2020 report said solar PV costs dropped a further 7% last year.

This article requires Premium SubscriptionBasic (FREE) Subscription

Try Premium for just $1

  • Full premium access for the first month at only $1
  • Converts to an annual rate after 30 days unless cancelled
  • Cancel anytime during the trial period

Premium Benefits

  • Expert industry analysis and interviews
  • Digital access to PV Tech Power journal
  • Exclusive event discounts

Or get the full Premium subscription right away

Or continue reading this article for free

“Today, renewables are the cheapest source of power,” said IRENA’s director-general Francesco La Camera. “Renewables present countries tied to coal with an economically attractive phase-out agenda that ensures they meet growing energy demand, while saving costs, adding jobs, boosting growth and meeting climate ambition.”

Over the decade 2010-2020, the cost of electricity from solar has plummeted by 85% for solar PV. And with record low prices for US$0.011-0.03c/kWh today, solar PV undercuts the cheapest new coal option without any financial assistance, said the report.

The report also showed that renewables have a lower operating cost than coal plants. Today, over 800GW of the world’s operating coal power capacity is more expensive to run than solar PV.

Broken down further, in the US 61% (149GW) of total coal capacity costs more than renewable power. In India, 141GW of coal is more expensive. And in Germany, no existing coal plant has a lower operating cost than that of new solar PV.

Similarly, a recent report from the Fraunhofer Institute for Solar Energy Systems confirmed that solar plants in Germany have substantially lower levelised cost of energy (LCOE) than conventional power plants.


How solar is beating coal in Germany

The Fraunhofer Institute for Solar Energy Systems ISE has presented the fifth edition of its study on the levelised cost of electricity (LCOE) of renewable power plants in Germany. Key takeaways include:

  • The LCOE from PV plants has continued to fall since the last report in 2018
  • The LCOE of PV ranged from €0.031-0.1101c/kWh (US$0.037-0.132c/kWh)
  • Today the LCOE of hybrid PV-battery systems ranges from €0.0524-0.198c/kWh
  • In 2021, the LCOE of renewables is at the same level as conventional power plants
  • Forecasts up to 2040 showed that the LCOE for ground-mounted PV systems will be €0.019-0.035c/kWh
  • By 2040, system costs are expected to fall below €350/kW for ground-mounted PV

In the last decade, the 534GW of renewable capacity added in emerging economies (at lower costs than coal) is reducing electricity costs by US$32 billion every year.

Read Next

October 3, 2025
Chinese government policies and supply-side production cuts will drive a significant increase in solar and storage component costs.
September 24, 2025
Representatives from the EU, IEA and IRENA have signed an open letter to deliver a 'just and equitable energy transition'.
September 18, 2025
The capacity of virtual power plants in operation in North America has reached 37.5GW, a 13.7% year-on-year growth, according to Wood Mackenzie.
September 9, 2025
The US installed 17.92GW of new capacity in the first half of 2025, with quarterly declines in additions for utility-scale and residential solar.
Premium
September 4, 2025
PV Talk: Highland Materials' CEO Richard Rast explains how the company aims to compete in the polysilicon landscape through US innovation.
August 29, 2025
The first half of 2025 has been the strongest year for UK solar energy generation on record, according to a new report think tank Ember.

Subscribe to Newsletter

Upcoming Events

Solar Media Events
October 21, 2025
New York, USA
Solar Media Events
November 25, 2025
Warsaw, Poland
Solar Media Events
December 2, 2025
Málaga, Spain
Solar Media Events
February 3, 2026
London, UK