Renewable energy is now cheaper to build than new fossil-fuel power plants in most of the world. Utility-scale solar and onshore wind cost less per megawatt-hour than new coal or gas plants, and renewables made up nearly half of the world’s installed electricity capacity by the end of 2025.
The world’s new commitment to the environment and these energy sources has moved well past the 2015 Paris Agreement. The most recent UN climate conference, COP30 in Belém, Brazil (November 2025), secured a pledge to mobilize $1.3 trillion a year in climate finance by 2035, though, notably, without a firm commitment to phase out fossil fuels.
The Importance of Renewable Energy
Clean, renewable sources of energy are readily available from the environment and require relatively minimal effort to harness. Because they come from sources in nature that are constantly replenished, there’s no danger of running out (as there is with the limited supply of fossil fuels). Renewables, therefore, also offer protection against price fluctuations that can destabilize economies that depend on large sources of fuel to function.
Common examples of renewable energy sources include:
- Solar power
- Wind power
- Hydroelectric power
- Tidal power systems
- Geothermal energy
- Biofuels (including wood, vegetable oil, and even algae)
That price stability shows up in the numbers: Lazard’s 2025 analysis puts onshore wind at $37–86 per megawatt-hour and utility-scale solar at $38–78, compared with $48–109 for a new natural gas plant, though existing, already-built gas and coal plants can still generate more cheaply than either, since they have no new construction costs to recover.”
What Renewables Will Replace
Renewable capacity has grown fastest in China over the past few years, but the US and Europe have also added record amounts of wind and solar. The bigger divide now isn’t which countries are adopting renewables; it’s which countries are keeping the policy support in place to keep building them.
Existing infrastructure heavily favors fossil fuels. In addition, power plants and transmission technology provide reliable storage for energy from non-renewable sources, which allows it to remain competitive despite environmental drawbacks.
Non-renewable fuel sources are typically fossil fuels based on carbon:
- Coal
- Petroleum
- Natural gas
These basic sources are often further refined into home heating oil, gasoline, and diesel fuels, and it’s even common for them to be used to power the turbines that create electricity.
Making the Best Energy Choices
Renewable energy sources have distinct long-term advantages over fossil fuels, chief among them the fact that they aren’t going anywhere. The sun will continue to shine. The rivers will run, and the wind will blow, all of which means that these energy sources can be relied upon for the long term.
The world’s supply of fossil fuels, on the other hand, is dwindling, and it’s becoming increasingly difficult to reach the pockets of oil and natural gas that do still exist well underground. As infrastructure to store and transmit renewable energy becomes more plentiful and the available fossil fuels dwindle further, simple supply and demand will bring down the price of renewable energy sources to make them the affordable default choice.
In the meantime, though, many areas of the world continue to rely on energy from a variety of sources, and consumers can do their best to make choices that work for their pocketbooks as well as the environment. When possible, it makes sense to choose renewable sources for electricity and home heating.
If renewable energy isn’t an option, though, you can do your best to choose the cleanest possible fuel as an alternative. For example, if you compare natural gas to oil, you’ll find that while most gas furnaces are quite efficient, oil emits more heat when burned. Your choice will depend largely on the availability of each fuel type in your area as well as the price.
One thing worth knowing if you’re in the US: this steady decline in renewable costs hit a speed bump in 2025. The One Big Beautiful Bill Act, signed into law in July 2025, accelerated the phase-out of federal tax credits for new wind and solar projects; projects now need to begin construction by mid-2026 and be completed by the end of 2027 to qualify. Partly as a result, Lazard’s 2025 analysis found the average cost of new US wind and solar actually rose for the first time in years, even though both remain cheaper than new gas or coal on average.
FAQ
For new power plants, yes, in most cases. Lazard’s 2025 analysis puts onshore wind at $37–86 per megawatt-hour and utility-scale solar at $38–78, compared with $48–109 for a new natural gas plant. The exception is older, already-built fossil fuel plants: since their construction costs are already paid off, some existing gas and coal plants can still generate power more cheaply than a brand-new wind or solar farm.
For now, but not for long. The One Big Beautiful Bill Act, signed in July 2025, accelerated the phase-out of federal tax credits for new wind and solar projects. To qualify, a project generally needs to begin construction by mid-2026 and be completed by the end of 2027. After that, the credits that helped drive a decade of falling renewable costs largely disappear.
Renewables generated about 32% of the world’s electricity in 2024, and made up 49.4% of total installed electricity capacity by the end of 2025, the largest annual jump on record. Solar accounted for most of that growth.
