File photo from 2021 shows USS Essex, right, and the USNS Wally Schirra transit the Strait of Hormuz in formation. (U.S. Marine Corps photo by Sgt. Alexis Flores/©USN Official Photo)

Renewable energy helped to avoid an estimated US$480 billion globally in fossil fuel costs in 2025, finds a new report by the International Renewable Energy Agency (IRENA), while avoiding 8.4 billion tonnes of carbon dioxide emissions.

China alone accounted for about $177 billion or 47% of the cost savings, reflecting the scale of its renewable energy fleet and the predominantly coal-based generation it displaced, IRENA writes. The United States came next, saving around $35 billion, followed by Brazil, India, Germany, and Japan.

Then in early 2026, when the Strait of Hormuz closed and caused oil and gas import prices to spike across Asia and Europe, renewable electricity generation provided “a crucial financial buffer.”

The intergovernmental organization reports that renewable energy costs are expected to keep declining for the next decade—though at a slower rate than in past years—becoming an “energy cost shock absorber” in times of global conflict.

“After more than a decade of rapid, learning-driven cost reductions, solar PV and onshore wind have entered a phase of maturity,” IRENA says. Costs for variable renewables like solar photovoltaics, onshore wind, and offshore wind energy have fallen by 89%, 71%, and 63%, respectively, since 2010. Battery storage costs are also falling. The cost for four-hour utility-scale batteries dropped by nearly 30% in 2025, for an overall 95% reduction since 2010.

Meanwhile, dispatchable non-fossil fuel energy sources got more expensive: the levelized cost of energy from hydropower and geothermal increased by 41% and 53%, “driven by lower output, rather than changes in technology costs.”

IRENA finds that over 90% of new utility-scale solar and wind capacity delivered power at a lower cost last year than the cheapest, newly-installed fossil-fuel-based alternative.

Looking ahead, costs for renewables are set to continue declining but at a slower rate, partly because some of the cost reductions were linked to increasing experience with the technology and adjusting perceptions of risk, which are less likely to change in the years ahead. Prices also fell earlier this decade as China substantially expanded its manufacturing capacity. But the government responded to the resulting supply glut by reining in the country’s output.

Recent increases in commodity and component prices are also raising the cost of some technologies like wind turbines, a development that IRENA says is likely to “exert upward pressure” on total installed costs through the rest of this year.

Find the full IRENA report here.