IRENA’s 2024 report also explores the structural cost drivers and market conditions shaping renewable investment. It concludes that stable and predictable revenue frameworks are essential to reduce investment risk and attract capital.

Mitigating financing risk is central to scaling renewables in both mature and emerging markets. Instruments such as power purchase agreements (PPAs) play a pivotal role in accessing affordable finance, while inconsistent policy environments and opaque procurement processes undermine investor confidence.

Particularly, integration costs are emerging as a new constraint on deployment of renewables. Increasingly, wind and solar projects are delayed due to grid connection bottlenecks, slow permitting and costly local supply chains. This is acute in G20 and emerging markets, where grid investment must keep pace with rising electricity demand and the expansion of renewables.

Furthermore, financing costs remain a decisive factor in determining project viability. In many developing countries of the Global South, high capital costs, influenced by macroeconomic conditions and perceived investment risks, significantly inflate the levelized cost of electricity (LCOE) of renewables.

For example, IRENA found that while onshore wind generation costs were similar in Europe and Africa with around USD 0.052/kWh in 2024, the cost structures varied significantly. European projects were capital-expenditure driven, while African projects bore a much higher share of financing costs. IRENA’s assumed cost of capital ranged from 3.8% in Europe to 12% in Africa, reflecting differing perceived risk profiles.

Finally, technological advances beyond generation are also improving the economics of renewables. The cost of battery energy storage systems (BESS) has declined by 93% since 2010, reaching USD 192/kWh for utility-scale systems in 2024. This reduction is attributed to manufacturing scale-up, improved materials and optimised production techniques.

Battery storage, hybrid systems, combining solar, wind and BESS as well as digital technologies are increasingly vital for integrating variable renewable energy. Artificial intelligence (AI)-enabled digital tools are enhancing asset performance and grid responsiveness. However, digital infrastructure, flexibility, and grid expansion and modernisation remain pressing challenges, including in emerging markets, where the full potential of renewables cannot be realised without further investment.

Read the full report Renewable Power Generation Costs in 2024.

In a special address on 22 July 2025, the UN Secretary-General António Guterres outlined a compelling and evidence-backed case for why a just transition away from fossil fuels to renewable energy is inevitable – and the vast benefits it will bring for people and economies. Watch the address and read the report on: A Moment of Opportunity | United Nations.