Renewable Power Generation Costs in 2022
About this book
Renewable Power Generation Costs in 2022 International Renewable Energy Agency (IRENA) en Renewable Power Generation Costs in 2022, published by the International Renewable Energy Agency (IRENA) in August 2023, delivers a comprehensive annual assessment of the levelized cost of electricity (LCOE) for utility-scale renewable energy technologies across global markets. This edition covers data from a particularly pivotal year: 2022 saw extraordinary volatility in fossil fuel prices driven by geopolitical disruption following Russia's invasion of Ukraine, while the renewable energy sector simultaneously grappled with supply chain inflation, rising commodity costs, and logistical bottlenecks. The interaction of these forces produced a uniquely important dataset that demonstrates, with exceptional clarity, the structural cost advantages of renewable energy relative to fossil fuel-based generation.
The central headline of the report is one of striking historical significance: for the first time, a majority of new renewable power capacity additions — across all technology types combined — had lower costs than the cheapest available fossil fuel-fired generation option. Specifically, 86% of newly added utility-scale solar PV capacity and 87% of newly commissioned onshore wind capacity had LCOEs below the cheapest new fossil fuel-fired electricity available in their respective markets. This reversal of the competitive position between renewables and fossil fuels, which would have been considered nearly inconceivable just fifteen years earlier, is now the global norm for investment decisions in new electricity generation.
Solar photovoltaics posted a global weighted average LCOE of USD 0.049/kWh in 2022, representing a 3% decline from the 2021 figure. This cost places solar PV 29% below the cheapest new fossil fuel-fired generation option globally, and the technology has declined in LCOE by 89% since 2010. The year 2022 was notable in that inflationary pressures on module prices, aluminum, and logistics moderated the steepness of the cost decline compared to previous years, yet the structural competitiveness of solar PV remained unassailable.
Utility-scale solar PV continues to set new price records in auction processes around the world, with contracted prices in markets including the United Arab Emirates, India, Saudi Arabia, and the United States achieving LCOEs in the USD 0.01-0.03/kWh range under optimal financing and resource conditions. Onshore wind achieved a global weighted average LCOE of USD 0.033/kWh in 2022, a 5% decline from 2021. This result places onshore wind 52% below the cheapest new fossil fuel-fired generation option globally — one of the most compelling cost competitiveness statistics in the entire renewable energy landscape.
The improvement from 2010, when onshore wind LCOE was 95% above the lowest fossil fuel cost, to 52% below it in 2022, represents a complete structural transformation of the electricity generation market over barely a decade. Offshore wind presented a more complex picture in 2022. The global weighted average LCOE for offshore wind rose by approximately 2% to USD 0.081/kWh, reflecting the combination of supply chain cost inflation for steel, cables, and specialized installation vessels, as well as project delivery delays in several key markets.
While offshore wind's cost competitiveness was temporarily squeezed, the report contextualizes this as a cyclical supply-side challenge within a longer-term downward cost trajectory. The technology had still achieved an LCOE reduction of over 60% since 2010. Concentrating solar power (CSP), bioenergy-based generation, hydropower, and geothermal energy all maintained competitive LCOEs in 2022, contributing to a diverse portfolio of renewable options suitable for different geographic, resource, and grid integration contexts.
These technologies, while individually smaller in deployment scale than solar PV and wind, provide valuable system attributes including dispatchability, long-duration storage (in the case of CSP with thermal storage), and fuel flexibility. One of the most economically compelling findings of the 2022 data relates to the cumulative fuel cost savings generated by the renewable buildout. IRENA estimates that the total renewable power capacity deployed globally since 2000 saved approximately USD 521 billion in fuel costs to the electricity sector in 2022 alone — an increase of USD 142 billion over the savings achieved in 2021, driven directly by the spike in fossil fuel prices.
This figure is not a projection or a model output; it is a direct calculation of the actual fuel expenditure that was avoided because renewable generation displaced fossil-fueled electricity production. It provides one of the clearest demonstrations of the economic insurance value of renewable energy investment: countries and utilities that invested early and substantially in renewables were significantly shielded from the economic shock of the 2022 energy crisis. The 2022 report also underscores persistent geographic disparities in renewable cost performance.
While cost reductions have been broad-based globally, the lowest costs are concentrated in markets with strong solar or wind resources, large installation scales, mature supply chains, and low-cost financing — most notably China, India, the United States, parts of the Middle East, and Brazil. Many developing economies, despite having excellent renewable resource endowments, continue to face higher effective costs due to elevated financing costs reflecting sovereign and project risk perceptions that are often misaligned with the actual technical and commercial risk profiles of renewable projects. IRENA uses the 2022 data to reinforce its policy advocacy message: the economic case for aggressive renewable energy deployment is now overwhelming, and the barriers that remain are political, regulatory, and financial rather than technological or economic.
Streamlining permitting, developing transmission infrastructure, creating enabling regulatory frameworks, and mobilizing concessional and blended finance for developing country markets are the primary levers through which governments and international institutions can accelerate the deployment of now cost-competitive renewable energy to meet climate and sustainable development goals.