Global levelized cost of electricity (LCOE) continues to reflect significant advancements in renewable energy technologies, with solar photovoltaics (PV) maintaining its position as the world’s most cost-competitive power source in 2025. According to Wood Mackenzie, single-axis tracker systems in the Middle East and Africa lead at $37 per megawatt-hour (MWh). Continued improvements in module efficiency and supply chain stabilization are expected to drive further cost reductions in key regions.
“In all regions, renewable energy technologies show a clear cost advantage over conventional generation. We expect renewables will continue to reduce costs through technological improvements, supply chain optimization, and economies of scale, thereby cementing their position as the dominant power generation technology globally,” said Amhed Jameel Abdullah, Senior Research Analyst at Wood Mackenzie.
Asia Pacific
In the Asia Pacific (APAC) region, utility-scale solar PV offers the lowest cost, ranging from $27/MWh in China to $118/MWh in Japan in 2025. Onshore wind is competitive, with costs of $25-70/MWh in China, India, and Vietnam. As battery costs decline, hybrid solar-plus-storage systems are gaining momentum, with Australia using storage to stabilize solar output and India pushing hybrid systems towards grid parity. China continues to lead in low-cost energy storage due to intense supplier competition. Offshore wind costs vary significantly, with China showing positive merchant revenue potential, while other markets face higher costs until the early 2030s.
Europe
Europe’s renewable LCOE fell by 7% in 2025, with utility-scale solar PV with single-axis tracking providing the lowest average LCOE. Falling module prices drove costs down 10% compared to 2024. Onshore wind LCOE is projected to fall 16% by 2030, while offshore wind costs are expected to rise in the early 2030s due to supply chain constraints. Four-hour utility-scale battery storage is expected to fall below $100/MWh by 2026 and drop another 35% by 2060, while commercial distributed solar PV LCOE is projected to fall 49% over the same period.
North America
In North America, renewable energy costs are projected to decline through 2060, despite near-term challenges such as new US tariffs and the phase-out of the Investment Tax Credit. Onshore wind LCOE is expected to grow 24% after 2030 due to expiring tax credits, although merchant revenue projections indicate strong long-term viability. Offshore wind LCOE remains high due to policy uncertainty and project development delays. As power demand grows, notably from AI and data center growth, capital costs and fuel expenses for gas turbines are increasing. Low-carbon dispatchable technologies like small modular reactors and enhanced geothermal remain more expensive but offer crucial system flexibility.
Latin America
Between 2020 and 2024, renewable LCOE in Latin America fell by 23%, with commercial solar PV achieving the lowest average cost. Onshore wind LCOE is projected to fall 42% by 2060, while fixed-bottom offshore wind costs are expected to drop 67% from 2025 levels. As infrastructure and market maturity increase, battery storage LCOE is projected to decline by 24% by 2060.
Middle East and Africa
In 2025, wind and solar LCOE in the Middle East and Africa fell by 6-10%. Utility-scale solar PV remains the lowest-cost source in the region, with single-axis tracker PV projected to reach approximately $17/MWh by 2060. Onshore wind is expected to stabilize around $30/MWh, while utility-scale battery storage costs are steadily declining.
Abdullah added, “The global energy transition is accelerating at an unprecedented pace, with solar PV and onshore wind emerging as the dominant low-cost options worldwide. Hybrid systems and battery storage are rapidly closing the competitiveness gap, marking a new era for renewable energy deployment.”
