Solar Power and its Global Solar PV competitiveness Through 2025
According to a pivotal BloombergNEF report, solar PV is on track to remain the most cost-effective new energy source across most of the globe by 2025. The report, titled “Cost of Clean Energy 2025: The View from 2024,” forecasts that solar PV will be the cheapest energy source in 91% of the world by 2025. This represents a slight dip from 96% in 2024, reflecting the simultaneous and significant cost reductions in onshore and offshore wind turbine equipment.
Cost Reductions and Solar PV competitiveness in Solar and Wind Energy
The report forecasts the global benchmark levelised cost of electricity (LCOE) for new-build solar PV will drop to an impressive $23/MWh in 2025. This continued downward trend is largely fueled by efficiencies in the basics of solar panel manufacturing and a robust global supply chain, where China alone provides over 80% of the world’s photovoltaic modules. While developing nations like China and India are expected to see the lowest LCOEs, developed markets also benefit. For homeowners and businesses in Germany, this trend is reflected in declining Power Purchase Agreement (PPA) prices across Europe, which fell by 2.4% in late 2025 as supply began to outpace demand.
For onshore wind, the global benchmark LCOE is projected to fall by 7% to $42/MWh by 2025. Offshore wind is expected to see a 4% reduction, reaching $86/MWh next year. Despite these substantial improvements, solar PV will maintain its competitive edge in the vast majority of markets.
Emerging Markets and Policy Impacts on Solar PV competitiveness
The report highlights that solar will continue to dominate in emerging markets such as the Middle East, Africa, and Latin America. Vast land availability and high solar irradiance in these regions will keep solar PV costs exceptionally low. However, local policies and market saturation can create complex dynamics.
For instance, while the global cost of solar panel raw materials remains low, trade policies in markets like the U.S. can create upward price pressure. In Europe, and particularly in Germany, the high penetration of solar has led to a phenomenon known as “price cannibalization,” where abundant solar generation during sunny midday hours can depress wholesale electricity prices. This makes the economics of large-scale solar farms more challenging, shifting the focus towards self-consumption and energy storage for smaller producers. The entire solar panel manufacturing process is geared towards lowering costs, but these regional market forces ultimately determine the final price for consumers.
Cost Trends in Battery Storage and Solar PV competitiveness
As solar generation becomes more widespread, the value of energy storage grows. Battery storage costs are also declining, with the global benchmark for the LCOE of four-hour storage systems projected to fall by 5% to $107/MWh by 2025. For German households and businesses, pairing solar installations with battery storage is becoming essential. It allows them to store cheap, self-generated electricity from sunny afternoons for use during the evening, maximizing their energy independence and insulating them from fluctuating grid prices. This synergy is crucial for unlocking the full financial and environmental benefits of a rooftop solar system.
Long-Term Outlook for Solar PV competitiveness
Despite regional complexities, the overall outlook remains incredibly bright. The report predicts that solar will remain the cheapest form of new energy in 91% of global markets by 2025. Onshore wind is expected to be the cheapest option in 4% of markets, with offshore wind and combined-cycle gas turbines each being the most economical in 3% of markets.
This enduring cost-competitiveness is driven by continuous innovation in solar panel manufacturing machines and a deeper understanding of the solar panel manufacturing plant cost breakdown. The long-term forecast confirms that solar will remain a dominant, and increasingly intelligent, force in the global energy mix for years to come.
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