The global energy system is reaching a defining moment as renewable power continues to undercut fossil fuels in price, scale, and resilience. According to the International Renewable Energy Agency’s (IRENA) latest Renewable Power Generation Costs in 2024 report, clean energy sources have cemented their role as the most cost-effective option for new power generation across much of the world, though grid and financing challenges threaten to slow progress – especially in lower-income and capital-constrained countries.

IRENA reports that solar photovoltaics (PV) were, on average, 41% cheaper than the lowest-cost fossil fuel alternatives last year, while onshore wind was 53% cheaper. Onshore wind remained the most affordable new power source, averaging $0.034 per kWh, with utility-scale solar PV following at $0.043/kWh. These cost advantages are attributed to maturing technologies, scale economies, and continued improvements in supply chains, with China playing a major role through manufacturing expansion.

Globally, 582 GW of renewable capacity was installed in 2024, avoiding fossil fuel use valued at around $57bn. In fact, 91% of renewable power commissioned last year was more economical than new fossil fuel-based generation.

UN Secretary-General António Guterres described this as a pivotal moment: “We are on the cusp of a new era. Fossil fuels are running out of road. The sun is rising on a clean energy age.”

Guterres warned that continued dependence on fossil fuels exposes nations to geopolitical shocks, inflationary pressures and market instability. “There are no price spikes for sunlight. No embargos on wind,” he said.

He called renewables the only path to affordable, stable and secure energy, urging countries to eliminate subsidies for fossil fuels and instead prioritize support for low-carbon technologies. “This transformation is fundamentally about energy security and people’s security. It’s about smart economics,” he said during a speech in New York.

While the transition is gaining speed, the IRENA report warns that it is far from guaranteed. Challenges around integrating variable renewables into electricity grids are growing. For every dollar invested in generation capacity, only 60 cents is being spent on grids.

This imbalance is increasingly causing project delays, particularly in G20 economies and emerging markets where electricity demand is rising and grid connections lag behind.

Francesco La Camera, IRENA’s director-general, said: “The cost-competitiveness of renewables is today’s reality. New renewable power out-competes fossil fuels on cost, offering a clear path to affordable, secure and sustainable energy.” However, he emphasised that maintaining this lead will require global cooperation to ensure open supply chains and predictable policy frameworks.

“Progress is not guaranteed. Rising geopolitical tensions, trade tariffs and material supply constraints threaten to slow the momentum and drive up costs,” he said.

In many Global South nations, financing remains a core hurdle. The cost of capital significantly inflates project expenses, even when resource conditions are strong. For instance, while onshore wind costs averaged about $0.052/kWh in both Europe and Africa in 2024, the financing environment varied widely. IRENA’s data assumed a cost of capital of 3.8% in Europe, compared with 12% in Africa – reflecting perceived investment risk and economic conditions. This disparity underscores the urgent need for concessional finance, stable policy and transparent procurement processes to scale renewable investment in emerging markets.

Technological improvements beyond generation are also reshaping the cost landscape. Since 2010, the price of battery energy storage systems has plummeted by 93%, reaching $192/kWh for utility-scale projects in 2024. Hybrid systems combining wind, solar, and storage, as well as AI-enabled grid management tools, are helping smooth variability and optimise performance. Yet significant gaps remain in digital infrastructure, grid flexibility and modernisation – particularly in developing economies.

Despite strong momentum, fossil fuel industries continue to exert influence. In the United States, President Donald Trump – now in his second term – has quickly dismantled key renewable energy incentives and ramped up support for coal and oil. China, although a global leader in renewable deployment, is still commissioning new coal-fired power stations. India’s Prime Minister Narendra Modi recently celebrated the country's milestone of producing 1bn tonnes of coal.

The UN’s Guterres called on major technology companies to source 100% of their electricity from low-carbon sources by 2030 and urged governments to deliver updated national climate strategies this September, in line with the 2015 Paris Agreement. Without urgent action, the rising global demand for electricity – driven by AI data centres, urban cooling needs and digital infrastructure – risks locking in high emissions that would make the agreement’s 1.5°C goal unattainable.

Investment is now the decisive factor. In 2023, global renewable energy investment hit $2 trillion – $800bn more than fossil fuel spending and a 70% increase over the last decade. Yet high capital costs and inconsistent regulation continue to create barriers, particularly in countries that most need energy access and resilience.

“This is no longer a technological challenge,” Bill Hare, CEO of Climate Analytics, told The Guardian. “Any investment in new fossil fuels now is a fool’s gamble. Joining the race to renewables brings not just stable prices and new jobs, but energy access and independence, especially for developing countries.”

Kaysie Brown of the E3G think-tank told the newspaper that urgent political ambition ahead of the UN’s COP30 summit in Brazil in November. “The world now has both the technical solutions and the economic imperative to accelerate the clean energy transition,” she said. “But unlocking this opportunity demands bold leadership and deeper cooperation.”

The trajectory toward clean energy is clear, but the speed and fairness of the shift depend on today’s decisions – about finance, infrastructure and political will. As IRENA and the UN both underscore, the age of fossil fuels is losing momentum, but the future still requires building.