Understanding Renewable Energy Cost Parity

This World Resources Institute fact sheet provides a framework for comparing the cost-effectiveness of renewable energy options against traditional electricity supply, emphasizing that accuracy depends on the perspective of the comparison and the specific supply options considered.

• Behind-the-meter generation is considered cost-competitive for end-use consumers if its average cost of energy, derived from LCOE or past projects, is at least equal to the retail electricity price over the project's lifetime. In developing economies, this competitiveness also includes savings from backup generation costs.
• A Power Purchase Agreement (PPA) is cost-competitive and offers savings to end-use consumers when the electricity price is lower than or equal to the retail electricity price throughout the contract or project lifetime.
• While renewable energy can reduce wholesale generation prices in the short-term due to low marginal production costs, long-term cost-competitiveness requires the average cost of energy to be at least equal to average wholesale costs during power generation.
• In traditional markets, renewable energy projects are cost-competitive against technologies providing the same service if they have a lower risk or an average cost of energy at least equal to the alternative.

APA

World Resources Institute (n.d.). Understanding Renewable Energy Cost Parity. https://www.wri.org/research/understanding-renewable-energy-cost-parity

Chicago

World Resources Institute. Understanding Renewable Energy Cost Parity. n.d. https://www.wri.org/research/understanding-renewable-energy-cost-parity.

Wikipedia

{{cite report |author=World Resources Institute |title=Understanding Renewable Energy Cost Parity |url=https://www.wri.org/research/understanding-renewable-energy-cost-parity |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldresourcesinstitutendunderstanding, author = {{World Resources Institute}}, title = {{Understanding Renewable Energy Cost Parity}}, institution = {World Resources Institute}, url = {https://www.wri.org/research/understanding-renewable-energy-cost-parity}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }