Kenya and the rest of the world avoided an estimated $480 billion (Sh62.1 trillion) in fossil fuel costs in 2025 as renewable energy continued to outcompete conventional power sources, the International Renewable Energy Agency (IRENA) has revealed.
The agency's ‘Renewable Power Generation Costs in 2025’ report shows that more than 90 per cent of the utility-scale renewable energy capacity added globally last year generated electricity at a lower cost than the cheapest new fossil fuel alternative.
The findings underscore the growing economic advantage of renewable energy, with the sector increasingly acting as a buffer against volatile fossil fuel prices and geopolitical disruptions.
Solar photovoltaic (PV) power remained one of the world's cheapest sources of new electricity at $44 (Sh5,689) per megawatt hour (MWh), unchanged from 2024.
The cost of onshore wind fell four per cent to $33 (Sh4,267)/MWh and offshore wind declined three per cent to $78 (Sh10,085)/MWh.
In contrast, the cost of new gas-fired power generation continued to rise, driven by equipment shortages and elevated fuel prices.
In markets such as Italy, Germany and Japan, electricity generated from gas approached $100 (Sh12,930)/MWh, while turbine shortages in the United States nearly doubled the capital cost of new combined-cycle gas plants.
The report attributes the widening cost gap to continued improvements in renewable technologies and the long-term decline in equipment prices.
Since 2010, the cost of solar PV has dropped by 89 per cent, concentrating solar power by 72 per cent, onshore wind by 71 per cent and offshore wind by 63 per cent, largely due to expanded manufacturing capacity led by China.
According to IRENA, renewable energy also strengthened countries' resilience during periods of global energy market disruption.
When the Strait of Hormuz was closed in early 2026, triggering spikes in fuel import prices across Asia and Europe, the agency notes that countries with significant renewable energy capacity were better insulated from the resulting cost increases.
Across Indonesia, Thailand and the Philippines, existing renewable electricity capacity helped avoid around $5.7 billion (Sh737 billion) in coal and gas purchases during 2025.
At the elevated fuel prices experienced between March and May 2026, those same avoided imports would have been worth approximately $6.5 billion (Sh840.5 billion), highlighting the financial protection offered by renewable energy investments.
“The decline in renewable energy costs is delivering a powerful economic dividend. For countries that still rely heavily on fossil fuels, every additional megawatt of renewables strengthens economic protection against fuel-price volatility, shielding consumers, businesses and public finances from higher costs,” said Francesco La Camera, Director-General at IRENA.
“Savings generated by existing renewable assets grow, providing a built-in hedge against future shocks. This energy crisis has shown yet again: expanding renewable capacity is a strategic investment in resilience and competitiveness.”
Across the 20 major economies assessed by the agency, renewable power avoided an estimated $377 billion (Sh48.7 trillion) in fossil fuel purchases in 2025.
China accounted for the largest share of the savings at $177 billion (Sh22.9 trillion), followed by the US at $35 billion (Sh4.5 trillion), Brazil at $32 billion (Sh4.1 trillion), India and Germany at $18 billion (Sh2.3 trillion) each, and Japan at $15 billion (Sh1.9 trillion).
Despite the strong outlook, IRENA warns that the pace of cost reductions is likely to slow as global clean technology manufacturing investment eases and commodity prices, tariffs and supply chain costs increase.
However, the agency expects renewable energy costs to continue declining through 2035, albeit at a slower pace than witnessed over the past decade.
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