According to a new report from BloombergNEF, global clean power costs could fall between 2% and 11% this year, despite tariffs.
Even with potential trade barriers, the “Levelized Cost of Electricity” report estimated that clean energy costs for technologies such as wind, solar and battery storage will decrease 22% to 49% by 2035. Much of these cost savings are made possible through China’s rapid clean energy technology manufacturing capacity. According to the report, China can produce a megawatt-hour of clean energy at 11% to 64% lower costs than other markets.
A 2024 Global Energy Monitor report found that just the renewable energy capacity under construction in China last year was double the total of the same capacity under construction of all other countries combined. Last year, China also set records for installing the most wind and solar energy capacities, with an 45% increase in wind and 18% increase in solar.
Renewables are expected to become cheaper in 2025 and beyond.
BNEF analysis shows new wind and solar farms are already undercutting new coal and gas plants on production cost in almost every market globally.
— Jan Rosenow (@janrosenow.bsky.social) February 7, 2025 at 7:00 AM
The high clean energy technology capacity in China has lead some countries in Europe as well as the U.S. to enact or consider tariffs on products like solar panel components and electric vehicles. In May 2024, the Biden administration proposed tariff raises on solar cells, batteries, EVs and other products, and the first of those tariff increases went into effect last fall, Utility Dive reported. This week, the Trump administration further enacted a 10% tariff on China, NPR reported.
“China is exporting green energy tech so cheaply that the rest of the world is thinking about erecting barriers to protect their own industries,” Matthias Kimmel, head of Energy Economics at BNEF, said in a statement. “But the overall trend in cost reductions is so strong that nobody, not even President Trump, will be able to halt it.”
The current U.S. administration may soon move forward with tariffs on Mexico and Canada, which could also impact electricity prices and nuclear energy production in the U.S.
But despite these trade barriers, the report had a positive outlook for clean energy prices globally. Already, battery storage costs globally fell by one-third in 2024, and fixed-axis solar farm rates decreased 21%. Battery storage is expected to fall further from a benchmark of $104 per megawatt-hour to below $100 per megawatt-hour, and solar and wind energy generation is expected to decreased by 2% to 4%.
“New solar plants, even without subsidies, are within touching distance of new U.S. gas plants. This is remarkable because U.S. gas prices are only a quarter of prevailing gas prices in Europe and Asia. It really raises the bar on what is possible even in the current market,” said Amar Vasdev, lead author of the report. “This opens up the likelihood that solar will become even more compelling in the coming years, especially if the U.S. starts exporting liquified natural gas and exposes its protected gas market to global price competition.”
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