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By 2025, the global average cost of electricity from solar photovoltaics (PV) and onshore wind will be roughly 5 to 6 US cents per kilowatt hour, according to a report by the International Renewable Energy Agency (IRENA), an intergovernmental organization that supports countries in their transition to a sustainable energy future. The estimated prices of renewables in 2025, compared to prices in 2015, are 59 percent lower for solar PVs, 35 percent lower for offshore wind, and a 26 percent decrease for onshore wind.

The report, The Power to Change: Solar and Wind Cost Reduction Potential to 2025, which was released on Wednesday, shows that with the right regulatory and policy frameworks, solar and wind technologies can continue to see price reductions to 2025 and beyond.

In a statement also released this week, IRENA's Director-General, Adnan Z. Amin, argued that the reduction in the costs of solar and wind energy will support the business case for making the switch from fossil fuels to renewable energy.

“Historically, cost has been cited as one of the primary barriers to switching from fossil-based energy sources to renewable energy sources, but the narrative has now changed,” said the Director-General. “Given that solar and wind are already the cheapest source of new generation capacity in many markets around the world, this further cost reduction will broaden that trend and strengthen the compelling business case to switch from fossil fuels to renewables.”

IRENA said since 2009, prices for solar PV modules and wind turbines have fallen roughly 80 percent and 30 to 40 percent, respectively. By doubling of cumulative installed capacity, prices of solar PV modules drop 20 percent and the cost of electricity from wind farms drops 12 percent, due to economies of scale and technology improvements.

Amin further said, “To continue driving the energy transition, we must now shift policy focus to support areas that will result in even greater cost declines and thus maximise the tremendous economic opportunity at hand,” adding that prices will continue to drop, thanks to different technology and market drivers.

The Power to Change, is the first of several solar-focused publications IRENA will release this summer. Future reports include Letting in the Light: How Solar Photovoltaics Will Revolutionize the Electricity System – which provides a comprehensive overview of solar PV across the globe and its prospects for the future – and a report on end-of-life management for solar PV panels. Both reports will launch at InterSolar Europe, taking place in Munich on 21-24 of June.