Understanding Renewable Energy Cost Parity

The document defines 'cost parity' as the cost-competitiveness between renewable energy and traditional electricity supply. It outlines specific criteria for determining competitiveness based on the deployment model: behind-the-meter generation is competitive when its average cost equals or is less than the retail price (plus backup savings in developing economies); Power Purchase Agreements (PPAs) are competitive when the price is lower than or equal to the retail price; and wholesale generation is competitive in the long-run when its average cost equals average wholesale costs.

• Behind-the-meter generation is considered cost-competitive for consumers if its average cost of energy, derived from LCOE or past projects, is equal to or less than the retail electricity price over the project's life. In developing economies, this calculation 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 short-term wholesale generation prices 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 market contexts, renewable projects are cost-competitive against technologies providing the same service if they have a lower risk or an average cost of energy that is 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} }