What is driving the decline of fossil fuels in electricity generation?
The primary cause is the rapid expansion and cost competitiveness of renewable energy sources.
The primary cause is the rapid expansion and cost competitiveness of renewable energy sources.
The decline of fossil fuels in electricity generation is primarily driven by the rapid growth and cost competitiveness of renewable energy sources. This is because solar and wind capacities are expanding significantly, making them more affordable compared to fossil fuels, resulting in renewables steadily increasing their share of the electricity mix while coal's share declines.
Renewable electricity generation is projected to rise by about 1,050 terawatt-hours (TWh) each year through 2030. Solar photovoltaic (PV) alone is expected to contribute over 600 TWh annually, reflecting rapid adoption and ongoing cost reductions. By 2026, solar PV generation is set to surpass both wind and nuclear, and by 2029, it will overtake hydropower.
This surge in renewables means their share of global electricity will climb from 42% in 2025 to 50% by 2030. Coal’s share, by contrast, is forecast to drop from 34% to 27% over the same period, as renewables and nuclear displace coal-fired generation.
Industry sources and recent reports agree that renewables remain the most cost-competitive source for new electricity generation. Solar PV costs have dropped from around USD 59 per megawatt-hour (MWh) in 2024 to USD 55/MWh in 2025, while hydropower costs have reached approximately USD 51/MWh. These figures are consistently below those for new fossil fuel plants.
Solar PV is the fastest-growing generation source, with its share of global electricity expected to nearly double from 8% in 2025 to 15% by 2030. Wind generation is also forecast to grow at about 10% annually. The combined share of variable renewable energy (VRE) solar and wind will rise from 17% to 27% of total generation by 2030.
While China and India are reducing coal-fired generation, increases in the United States, Eurasia, and other Asian markets are offsetting these declines. Still, the global trend is clear: renewables are expanding rapidly, driven by falling costs and supportive policies.
Low-emissions sources, including renewables and nuclear, are expected to meet most additional electricity demand through 2030. Coal-fired output is forecast to contract by 0.9% annually, while gas-fired generation grows at 2.6% per year. Nuclear generation is also set to increase, especially in China, where nearly 30 GW of new capacity is anticipated.
Despite these changes, coal will remain the largest single source of electricity through 2030, mainly due to its continued use in China. However, the plateauing of coal-fired generation in China is a major factor in the global decline of coal’s share.
| Card | Set | Price as stated |
|---|---|---|
| Solar PV | 2025 | USD 55/MWh |
| Hydropower | 2025 | USD 51/MWh |
| Solar with storage | 2025 | USD 54–82/MWh |
| Fossil fuel alternatives | 2025 | USD 70–85/MWh |
There is some variation in reported costs for solar with storage, with sources citing a range from $54 to $82 per MWh. Fossil fuel alternatives are consistently higher, between $70 and $85 per MWh. These differences reflect technology choices, regional factors, and market conditions, but the overall trend favors renewables on price.
Technological improvements, economies of scale, and supportive policy frameworks continue to drive down renewable costs. Weather conditions can cause year-to-year fluctuations, as seen in 2025 when wind and hydropower growth slowed. Nevertheless, the long-term cost trend for renewables remains downward.
Natural gas prices and fuel switching also influence the electricity mix and the relative competitiveness of renewables. In regions with high gas prices, renewables become even more attractive from a cost perspective.
The primary cause is the rapid expansion and cost competitiveness of renewable energy sources.
Renewables' share is expected to rise from 42% in 2025 to 50% by 2030.
It is projected to rise by about 1,050 terawatt-hours (TWh) each year.
Solar PV is expected to cost USD 55/MWh, while hydropower will be around USD 51/MWh.
Renewable energy costs are consistently lower, with fossil fuel alternatives ranging from USD 70–85/MWh.
Technological improvements, economies of scale, and supportive policy frameworks are key factors.
Yes, coal will remain the largest single source of electricity, primarily due to its continued use in China.
