IRENA: Solar and wind storage undercut coal, gas in firm power costs

It delivers lower firm electricity costs than coal and gas across key regions.

Solar and wind power combined with battery storage can supply round-the-clock electricity at lower cost than new coal and gas in high-resource regions, according to a report by the International Renewable Energy Agency (IRENA).

It places firm levelised costs for solar-plus-storage at $54 per megawatt-hour (MWh) to $82/MWh in strong solar regions, compared with $70/MWh to $85/MWh for new coal in China and above $100/MWh for new gas globally.

IRENA attributes the cost position to long-term declines in technology costs.

Since 2010, installed costs have fallen by 87% for solar photovoltaic, 55% for onshore wind, and 93% for battery storage.

The agency states that hybrid systems combining generation and storage support continuous electricity supply for industrial demand, including data centres and artificial intelligence infrastructure.

The systems also reduce exposure to electricity price volatility and improve utilisation of grid connections.

Construction timelines for solar, wind, and storage projects range from one to two years after permitting and grid connection, compared with longer lead times for gas-fired generation in most markets.

The report projects further cost reductions of around 30% by 2030 and 40% by 2035, placing firm renewable costs below $50/MWh in the most favourable locations.

IRENA cites the Al Dhafra project in the United Arab Emirates as an example of solar and storage integration, with one gigawatt of firm capacity at around $70/MWh.

Wind-plus-storage systems show similar trends as firm costs range from $59/MWh in Inner Mongolia to $88/MWh to $94/MWh in Brazil, Germany, and Australia in 2025, with projected costs reaching $49/MWh to $75/MWh by 2030.

The report also states that combining solar and wind reduces storage requirements due to complementary generation profiles, which lowers system costs.