The energy sector has seen a significant transformation in recent years, with solar and wind power becoming the dominant sources of new power installations. This shift is driven by the decreasing costs associated with renewable energy sources.
In the Asia Pacific region, renewable energy LCOE has seen a remarkable 16% drop in 2024, with solar photovoltaic (PV) technology being the most cost-effective option. This trend is expected to continue, positioning APAC as a leader in renewable energy adoption.
North America is projected to witness dramatic declines in renewable energy costs in the coming decades. By 2060, utility-scale solar LCOE is anticipated to decrease by an average of 60%, while onshore wind is expected to see a 42% reduction in LCOE. Offshore wind, although facing short-term cost pressures, is projected to achieve a significant LCOE reduction of up to 67% by 2060.
In Europe, the pace of cost reduction in renewable energy LCOE is slower compared to other regions, with a 0.6% drop this year. However, projections suggest that renewable technologies could become up to 85% cheaper than fossil fuels by 2060, emphasizing the importance of sustained investment in low-carbon technologies.
Latin America has experienced an 8% drop in renewable energy LCOE, with single-axis solar PV being the most competitive option. By 2060, renewables in Latin America are expected to hold a 70% cost advantage over fossil fuels.
The Middle East and Africa region has witnessed a 13% drop in capital costs for renewable energy technologies, with solar energy emerging as the frontrunner. The competitive LCOE for solar in this region is projected to reach an impressive US$19.7/MWh by 2060.
As renewable energy technologies continue to mature and scale, they will reshape the global energy landscape. The financial viability of renewables, coupled with their environmental benefits, positions them as the cornerstone of future energy strategies.