The global average cost of electricity generated from solar and wind technologies could fall by 26% to 59% by 2025.
The International Renewable Energy Agency’s (IRENA) report found solar and wind technologies can continue to realise cost reductions to 2025 and beyond with the right policy frameworks in place.
It estimates power costs could decrease by 26% for onshore wind, 35% for offshore wind and 59% for solar energy in the next nine years.
The report forecasts global average cost of electricity from solar and onshore wind to be roughly five to six US cents per kilowatt hour.
The cost reductions to 2025 will increasingly depend on the balance of system prices, such as inverters, racking and mounting systems, technology innovations, operations and maintenance costs and quality project management, it adds.
IRENA suggests policymakers should focus on adopting policies that can cut costs in these areas.
Director-General Adnan Z. Amin said: “We have already seen dramatic cost decreases in solar and wind in recent years and this report shows that prices will continue to drop, thanks to different technology and market drivers.
“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.”
Solar produced more electricity than coal in the UK in May – the first ever month to pass the milestone.