Wood Mackenzie has released five regional Levelised Cost of Electricity (LCOE) reports for 2024, which provide an analysis of the evolving electricity cost landscape across global markets. These reports cover Asia Pacific (APAC), Europe, North America, Latin America (LATAM), and the Middle East and Africa (MEA).
Asia Pacific
In 2024, the LCOE for renewable technologies like wind and solar in APAC decreased by 16%, driven by a 21% drop in capital costs. Solar PV remains the region’s cheapest generation option, with competitive pressure leading to significant reductions in project costs. Distributed PV also saw a cost reduction of 33%, reflecting market competition and improved module efficiencies for technologies such as TOPCon and HJT. However, offshore wind remains a premium technology, with cost competitiveness largely limited to China, while other markets continue to face high CAPEX due to ongoing supply chain and inflationary pressures.
Europe
Europe saw a modest 0.2% reduction in the average LCOE for renewables, despite a 9% decrease in installation costs from 2020 to 2023, due to the financial challenges of project funding. Utility-scale solar PV in Southern Europe leads the way, benefiting from significant declines in capital costs and achieving the lowest LCOE in the region. By 2060, renewable technologies could be up to 85% cheaper than fossil fuels, while sustained investment in dispatchable low-carbon technologies remains crucial to ensure grid stability as renewables expand.
North America
The 2024 North America LCOE report reveals significant cost reductions for renewable energy technologies, with wind and solar leading the way. The renewable technologies LCOE declined by 4.6% in 2024, underpinned by a 4.2% drop in capital costs. By 2060, utility-scale solar LCOE is expected to decline by an average of 60%, driven by advancements in cell technology and increased production capacity for key components like polysilicon. Onshore wind in the U.S. is projected to see a 42% reduction in LCOE, underscoring the long-term competitiveness of renewables in the region. However, offshore wind faces short-term cost pressures but will see a significant LCOE reduction of up to 67% by 2060, highlighting its growing role in the future energy mix.
Latin America
In 2024, the average LCOE for renewables in Latin America decreased by 8%, driven by easing supply chain pressures and falling capital costs. Single-axis solar PV now boasts the region’s lowest LCOE, especially in mature markets like Brazil, Chile, and Mexico. By 2060, renewables are projected to hold a 70% cost advantage over fossil fuels, highlighting their growing competitiveness. As a result, Brazil and Mexico are poised to see a rise in merchant market opportunities, as declining solar and wind costs surpass electricity prices, creating significant revenue potential.
Middle East and Africa
In 2024, the Middle East and Africa (MEA) region is witnessing a notable reduction in the levelised cost of energy (LCOE) for solar and wind projects, driven by a 13% decline in capital costs per kW. This decrease, spurred by stabilising supply chains, highlights solar PV’s position as the most cost-effective energy source in the region. With Saudi Arabia and the UAE benefiting from high solar irradiance, single-axis tracker solar PV emerges as the most attractive option for developers, set to reach a competitive LCOE of USD 19.7/MWh by 2060.
