Single-axis tracker solar PV in the Middle East and Africa hits lowest LCOE at $37/MWh, according to Wood Mackenzie
Asia Pacific sees utility-scale solar LCOE ($27/MWh to $118/MWh) and onshore wind ($25/MWh to $70/MWh) as the cheapest options by 2025
Battery storage and hybrid systems rapidly reduce costs that will enhance renewable competitiveness globally
Renewable energy has reached a new level of cost competitiveness worldwide in 2025, with solar PV leading the way, according to a new analysis by Wood Mackenzie. It reports that single-axis tracker solar PV systems in the Middle East and Africa now have the lowest regional levelized cost of electricity (LCOE) at just $37/MWh.
In the Middle East and Africa, wind and solar costs fell by 6% to 10% year-on-year (YoY) in 2025. Utility-scale solar PV, especially single-axis trackers, remains the cheapest option, with Wood Mackenzie projecting around $17/MWh LCOE by 2060. Onshore wind stays more expensive, near $30/MWh, while battery storage costs continue to decline.
Analysts see single-axis and fixed-tilt PV to stay cheaper than onshore wind across the region. Offshore wind faces higher costs and slower near-term growth, though long-term reductions are expected. Overall, solar PV and onshore wind lead as low-cost options, with hybrid systems and storage rapidly closing the competitiveness gap.
Elsewhere, Wood Mackenzie analysts see wind and solar power reshaping the Asia Pacific energy market. Utility-scale solar offers the region’s lowest generation costs, from $27/MWh in China to $118/MWh in Japan by 2025. Onshore wind is also highly competitive, with China, India, and Vietnam leading at $25/MWh to $70/MWh. Offshore wind costs vary widely, with China showing revenue potential while others face higher costs until the 2030s.
For the Asia Pacific region, hybrid solar-plus-battery systems are expanding as battery prices drop, especially in Australia and India. China leads in low-cost energy storage, while small modular nuclear reactors remain costlier than traditional ones.
As capital costs declined, renewable energy LCOE in Europe fell by 7% in 2025. Utility-scale solar PV with single-axis tracking offers Europe's lowest average LCOE, with declining module prices driving 10% cost reductions from 2024, according to the market intelligence firm’s assessment.
Utility-scale 4-hour battery storage costs are projected to go under $100/MWh by 2026, dropping by another 35% by 2060. Commercial rooftop solar will also become much cheaper by 2060 as LCOE declines by 49%. Southern and Eastern Europe lead in wind and solar profitability.
In North America, renewable energy costs are expected to fall through 2060 despite short-term policy challenges. US solar faces higher costs now due to tariffs, but advances in modules, inverters, and trackers will lower prices long-term. Residential solar also sees near-term cost pressure from tariffs and expiring tax credits.
In Latin America, the average renewable energy costs dropped 23% between 2020 and 2024, driven by better performance and 20% lower capital costs. Commercial solar PV has the lowest LCOE in the region, with single-axis utility-scale solar most competitive in 2025. Brazil, Chile, and Mexico lead the region, with the lowest LCOEs. Onshore wind LCOE will fall 42% by 2060 due to technological improvements and larger-scale manufacturing, while offshore wind costs will only drop significantly after the mid-2030s, eventually falling 67%. Battery storage is growing, with LCOE expected to fall 24% by 2060 as infrastructure and supportive policies expand.
Spurred by continued improvements in module efficiency and supply chain stabilization, solar PV technology maintains its position as the world’s most cost-competitive power generation source through 2025.
“Across all regions, renewable technologies demonstrate clear cost advantages over conventional generation,” said Senior Research Analyst at Wood Mackenzie, Amhed Jameel Abdullah. “We expect continued cost reductions through technological improvements, supply chain optimisation and economies of scale, reinforcing renewables' position as the dominant power generation technology globally.”