The global weighted average levelised cost of electricity (LCOE) for utility-scale solar photovoltaic (PV) plants dropped by 12% year-on-year to $0.044/kWh in 2023, according to the International Renewable Energy Agency (IRENA).
This indicates a 90% fall since 2010, which highlights the growing affordability of renewable energy technologies.
The new data, featured in IRENA’s “Renewable Power Generation Costs in 2023” report, signals a major boost for the solar sector.
It also highlights the rapidly dropping costs across the renewable energy industry, reflecting broader market trends that are driving clean energy adoption globally.
The report notes a record 473 gigawatts (GW) of new renewable power capacity was installed in 2023, representing a 54% increase over 2022.
The sharp decline in the LCOE of solar PV since 2010 is attributed largely to falling module prices and technological advances.
Asia, particularly China, has been at the forefront of this expansion, leading the global markets for solar PV, wind, and hydropower. China alone accounts for 63% of global installed solar PV capacity, benefitting from lower costs driven by its dominance in module production.
Falling module prices have been central to the declining LCOE. In fact, solar PV’s LCOE has nearly halved since 2018, with just a minor increase in cost from $0.001/kWh between 2021 and 2022. This compares favorably with other renewable technologies like hydropower, which saw higher cost variations.
“Falling levelised cost of electricity continues to drive the renewable energy revolution,” said Francesco La Camera, Director-General of IRENA. “These trends are accelerating clean energy investments and providing solutions to achieve global climate targets.”
IRENA’s report also highlights substantial fuel savings made possible by the expansion of renewable power. The global electricity sector saved $409 billion in 2023 due to investments in renewables. These savings were particularly pronounced in Asia, where China has made massive investments in wind, solar, and hydropower projects.
“Asia, led by China, has installed vast amounts of renewable energy, generating significant cost savings for the region,” IRENA’s report said.
While falling costs are most apparent in solar PV, other renewable technologies have also seen declines in their LCOE. For example, offshore wind, onshore wind, and hydropower have also benefited from reduced costs, although their LCOE has fluctuated more significantly year-to-year.
Despite the promising trends, supply chain issues and policy inconsistencies remain challenges for the sector. The report points to disjointed regulatory frameworks that complicate the scaling of renewable energy projects, particularly in markets outside of Asia. Harmonizing standards and streamlining project approvals could alleviate bottlenecks and boost progress toward global climate goals.
Jasim Husain Thabet, Group CEO of TAQA, noted the need for strategic alignment between utilities and policymakers. “To achieve the global target of tripling renewable power capacity by 2030, supply chain resilience is crucial,” he said.
In some regions, the availability of key equipment, such as transformers and grid infrastructure components, faces long lead times, creating bottlenecks that hinder the rapid deployment of renewable energy projects.
Looking ahead, IRENA forecasts remarkable growth across all renewable energy sources. The agency predicts that by 2030, annual investment in renewable energy must reach $1.55 trillion—double the current grid infrastructure investment target of $720 billion per year—to meet climate targets.
La Camera remains optimistic about the sector’s future. “Solar PV and onshore wind will have the largest impacts on the tripling of renewable energy capacity,” he said. “Low-cost renewables are an immediate solution to reduce dependency on fossil fuels, mitigate economic and social damages from carbon-intensive energy, and bolster energy security.”
While the solar industry has made the most significant progress in terms of cost reductions, other renewable energy technologies continue to offer promising opportunities. Onshore and offshore wind are also benefiting from improved efficiency and falling prices.
The sustained decline in LCOE and the accelerating pace of renewable energy adoption indicate that global markets are increasingly embracing clean energy solutions.
Governments and private sectors are being urged to continue investing in this transition, as it plays a vital role in achieving the world’s climate goals.
