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Compare offshore wind with other renewable sources by fixing the same commissioning year, geography, currency, project boundary and cost metric before looking at the numbers. For a high-level benchmark, the International Renewable Energy Agency (IRENA) reports that new projects commissioned globally in 2025 had weighted-average generation costs of USD 78/MWh for offshore wind, compared with USD 33/MWh for onshore wind and USD 44/MWh for solar photovoltaic (PV). That makes offshore wind more expensive on this single metric, but it does not by itself show which resource is the better choice for a particular grid.
A useful comparison therefore has two layers: lifetime generation cost, usually expressed as levelized cost of electricity (LCOE), and system value, which includes when and where electricity arrives, transmission, curtailment, capacity contribution, financing, and environmental constraints. The method below lets you make an apples-to-apples comparison without treating a global average as a project bid or a capacity factor as guaranteed power.
Start with the decision you are trying to make
The right comparison depends on the decision. A utility choosing a new-build technology, a government evaluating a procurement contract, and a grid planner designing a least-cost portfolio need different evidence.
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If the question is “Which technology produces electricity most cheaply over its life?”, compare LCOE for projects commissioned in the same period. Keep the currency, price year, discount-rate convention and project boundary consistent. This is the use case for IRENA’s global weighted-average figures.
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Procurement or contract price
If you are evaluating an auction award or power-purchase agreement (PPA), compare the contract’s payment structure rather than substituting an LCOE number. A PPA price reflects contract duration, indexation, balancing obligations, curtailment rules, development risk and financing conditions. The U.S. Department of Energy (DOE) notes in its “Turning Oranges to Apples” guidance that face-value auction and PPA prices can be misleading when those terms differ.
Least-cost portfolio or grid value
If the objective is a reliable, low-emissions portfolio, add hourly production, transmission, storage, balancing, congestion, curtailment and capacity value. A technology with a higher LCOE can still be useful if it produces during hours when the local system is short of electricity or if it diversifies the existing resource mix.
Use one cost metric and define its boundary
What LCOE measures
LCOE is the discounted lifetime cost of generating electricity divided by discounted lifetime generation. It normally combines capital expenditure, financing, fixed and variable operating costs, fuel costs where applicable, expected output and project life. It is a generation-cost metric, not a retail tariff and not a complete measure of grid value.
Before comparing values, write down whether the calculation includes development, construction, interconnection, export cables, onshore transmission, decommissioning, taxes, subsidies or system integration. Two studies can use the same technology label and produce different LCOEs because their boundaries and financial assumptions differ.
Why LCOE is not a market price
An LCOE of USD 78/MWh does not mean every megawatt-hour from an offshore wind farm will sell for USD 78. Market revenue varies by hourly wholesale prices, contract terms and location. Conversely, a low auction price may transfer balancing, transmission or curtailment costs to another party. Use LCOE to compare lifetime generation costs, then perform a separate revenue and system-value assessment.
Record the assumptions
- Commissioning year and whether values are nominal or real.
- Currency and price year, such as 2025 U.S. dollars per megawatt-hour.
- Geography and resource quality.
- Technology definition, including fixed-bottom or floating offshore wind and utility-scale or distributed solar.
- Project size, expected operating life, capacity factor and degradation assumptions.
- Financing structure, discount rate and weighted average cost of capital.
- Included and excluded grid, development and environmental costs.
IRENA’s cost annex explains its data, metrics, assumptions and LCOE method; use that documentation when reproducing or adapting its comparisons.
2025 global benchmark: offshore wind versus other renewables
The latest located IRENA comparison, published in July 2026 in Renewable power generation costs in 2025, reports global weighted-average generation costs for new projects commissioned in 2025. These are portfolio averages, not forecasts for a named project or guaranteed auction prices.
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| Technology | 2025 global weighted-average cost | How to interpret it |
|---|---|---|
| Onshore wind | USD 33/MWh | Lowest of the listed technologies in this IRENA comparison; site quality and transmission still vary widely. |
| Solar PV | USD 44/MWh | Utility-scale projects aggregated globally; output is daylight-dependent and may need complementary resources. |
| Hydropower | USD 62/MWh | New projects only; costs and feasibility depend strongly on suitable sites, hydrology and permitting. |
| Offshore wind | USD 78/MWh | Higher than onshore wind and solar PV on this global average; marine construction, foundations, cables and specialized vessels add cost. |
| Bioenergy | USD 86/MWh | Fuel supply, sustainability criteria and plant type affect both cost and emissions. |
| Geothermal | USD 89/MWh | Exploration and drilling risk are site-specific; output can be relatively steady where resources are proven. |
| Concentrating solar power | USD 115/MWh | Thermal storage and solar-resource quality can change project economics; this is a global average for new 2025 projects. |
In the same IRENA report, more than 90% of utility-scale renewable projects commissioned in 2025 produced electricity below the cost of the cheapest new fossil-fuel plant in their respective markets. That comparison is IRENA’s specified market comparison; it should not be read as a claim that every renewable project beats every fossil-fuel alternative.
Do not mix different data years without labeling them
IRENA’s earlier Renewable Power Generation Costs in 2024, published in July 2025, gives a separate comparison for newly commissioned utility-scale projects: USD 34/MWh for onshore wind, USD 43/MWh for solar PV and USD 57/MWh for hydropower. Those are 2024-year global weighted-average LCOE figures. They are useful for examining year-to-year movement, but they should not be combined with the 2025 table as though all values came from one dataset.
| Technology | 2024 IRENA global weighted-average LCOE | Data scope |
|---|---|---|
| Onshore wind | USD 34/MWh | Newly commissioned utility-scale projects in 2024. |
| Solar PV | USD 43/MWh | Newly commissioned utility-scale projects in 2024. |
| Hydropower | USD 57/MWh | Newly commissioned utility-scale projects in 2024. |
A one-dollar change between reports does not prove that a technology became universally cheaper or more expensive. The project mix, exchange rates, financing conditions and regional composition can all change a global weighted average.
Build an apples-to-apples comparison step by step
- State the decision. Write “generation cost,” “procurement price,” “reliable capacity,” or “portfolio value.” Do not use one metric to answer all four questions.
- Choose the comparison year. Use projects commissioned in the same year or normalize all costs to a clearly stated price year.
- Set geography. A global average is a benchmark. For a real decision, use the country, market or grid zone where projects would operate.
- Define each technology. Specify offshore wind type, turbine size, solar configuration, hydropower class or geothermal resource. Avoid comparing a mature technology category with an unusually constrained subset of another.
- Align the project boundary. Decide whether interconnection, export infrastructure, storage, balancing and decommissioning are inside or outside the calculation.
- Align financial assumptions. Use the same discount-rate convention, inflation treatment, tax treatment and financing basis, or show sensitivity ranges.
- Calculate or obtain LCOE. Present the result with its currency, price year, geography and assumptions attached to the number.
- Add hourly and system analysis. Model production profiles, demand, transmission, congestion, curtailment, storage and reserve needs.
- Evaluate environmental and siting constraints. Identify habitats, species, construction effects, permitting requirements and mitigation obligations for the actual site.
- Run sensitivities. Test changes in capital cost, financing rate, capacity factor, construction schedule, cable cost, curtailment and power price.
Compare output, not just average cost
Capacity factor
Capacity factor is the ratio of actual generation over a period to the generation that would occur if a plant operated at full rated output continuously. It helps estimate annual energy, but it is not firm capacity and does not show whether output arrives during peak demand.
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Hourly and seasonal profile
Solar PV generally follows daylight and seasons. Wind output follows weather systems and can be strong at times of low demand or weak during stressful grid conditions. Hydropower can offer dispatch flexibility where reservoir rules and water availability permit it. Geothermal and some bioenergy plants may provide steadier output, subject to resource and operating constraints.
Compare at least one full year of hourly or sub-hourly production against local demand. Annual averages can hide a mismatch that creates storage, backup or curtailment costs.
Capacity value and reliability
Capacity credit estimates how much dependable contribution a resource provides during periods when the system is most likely to be short. It depends on the grid, weather correlation, interconnection and the rest of the generation fleet. In a DOE study of a modeled future power system in the northeastern United States, offshore-wind capacity credit ranged from 14.5% to 28.3% across scenarios. That is a regional, scenario-specific result, not a universal offshore-wind value.
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Use an effective-load-carrying-capability or equivalent reliability method for the target system. Do not multiply nameplate capacity by an average capacity factor and call the result firm capacity.
Account for transmission, congestion and curtailment
Offshore wind resources are often located far from existing load centers, so export cables, onshore substations and network upgrades can materially affect delivered cost. Onshore wind and solar can also require new lines when the best resource is remote. Include these assets consistently or show them as a separate system-cost layer.
Curtailment
Curtailment occurs when a plant could produce electricity but the grid cannot accept it because of transmission limits, low demand or operating constraints. A high-resource project can have a lower plant LCOE yet a higher delivered cost after repeated curtailment. Model curtailment with the dispatch and transmission assumptions used for competing resources.
Congestion and location
Two projects using the same technology can have different value because one connects behind a constraint and the other connects near load. DOE’s regional offshore-wind analysis shows that congestion and capacity value differ by location and scenario. Apply those findings to the relevant grid rather than transferring a result from one region to another.
Separate project revenue from system value
Project revenue is the money a plant can earn through a PPA, auction, bilateral contract or wholesale market. System value is the benefit to the power system after accounting for avoided generation, capacity, flexibility, transmission use, losses, congestion and integration costs. A project can have strong revenue under a contract while providing limited incremental system value, or the reverse.
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- Is the price fixed, indexed or linked to inflation?
- Who pays for balancing, forecasting errors and imbalance charges?
- Who bears curtailment risk, and is curtailed energy compensated?
- Are transmission upgrades included in the quoted price?
- What are the term, credit requirements, milestones and termination provisions?
- Does the contract pay for energy only, or also capacity, renewable certificates or other attributes?
Report the contract price separately from LCOE. Converting both to a common present-value basis can help, but it cannot remove differences in risk allocation without detailed contract modeling.
Evaluate environmental and siting effects at the project location
Environmental effects are not a single technology-wide number. DOE’s wind-energy and environment guidance emphasizes that impacts depend on location and species. For offshore projects, assess marine mammals, birds, fish, benthic habitat, navigation, fisheries, underwater noise, vessel traffic, electromagnetic fields from cables and the effects of construction, operation and decommissioning.
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Use a lifecycle view
- Planning and surveys: baseline ecological and fisheries studies, stakeholder consultation and permitting.
- Construction: pile driving or other foundation work, vessel activity, seabed disturbance and temporary noise.
- Operation: collision risk, habitat change, cable effects, artificial-reef effects and interactions with fishing or shipping.
- Decommissioning or repowering: removal, partial removal or reuse of foundations and cables, with a new impact assessment.
Mitigation can include seasonal work windows, acoustic controls, protected areas, vessel-speed rules, routing changes, monitoring and adaptive management. Do not turn a general agency description of possible pathways into a finding about every project or species.
Understand what drives offshore-wind cost
Offshore wind combines a strong wind resource with a complex marine supply chain. Cost differences between projects can arise from:
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- Water depth and seabed conditions, which affect foundations and installation.
- Distance from shore and the length and voltage of export cables.
- Port availability, installation vessels and local-content requirements.
- Turbine size, array design and wake effects.
- Weather windows, marine safety and construction schedule risk.
- Financing rates and the cost of delays before revenue begins.
- Onshore grid connection and network reinforcement.
- Operations access, corrosion protection and major-component replacement.
These factors explain why a global weighted average is informative for orientation but insufficient for a procurement decision. A site-specific financial model should show how each assumption changes LCOE and delivered system cost.
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A transparent worksheet makes disagreements traceable. Use one row per technology and columns for the following items:
| Category | Recommended entry |
|---|---|
| Project and location | Technology subtype, market, connection point and project size. |
| Cost basis | LCOE, auction price, PPA price or system cost; never leave the metric implicit. |
| Money basis | Currency, real or nominal treatment, price year and exchange-rate method. |
| Capital and finance | Overnight cost, construction schedule, debt/equity mix, discount rate and taxes. |
| Energy output | Hourly profile, annual generation, capacity factor, degradation and availability. |
| Grid effects | Interconnection, transmission, losses, congestion, curtailment, storage and balancing. |
| Reliability | Capacity-credit method, peak-demand period and weather correlation. |
| Environment | Site-specific impact pathways, mitigation, monitoring and decommissioning. |
| Uncertainty | Low, central and high cases for major cost and performance assumptions. |
Present a central estimate and a sensitivity chart rather than a single over-precise ranking. The chart should identify which assumptions cause offshore wind to move above or below competing options in the decision metric.
Common comparison errors and how to correct them
Mixing years
Error: Put the 2025 offshore-wind figure beside a 2024 hydropower figure without labeling the different data years. Correction: Use one report year for the main table and show earlier values in a separate, clearly dated table.
Comparing LCOE with a PPA price
Error: Declare the lower number the winner. Correction: Describe the contract’s risk allocation and compare both options on a common present-value and system-cost basis.
Treating global averages as bids
Error: Use USD 78/MWh as the expected price for a particular offshore project. Correction: Treat it as a 2025 global weighted-average benchmark and build a local project model.
Confusing energy with dependable capacity
Error: Use capacity factor as the amount available during a peak event. Correction: Calculate capacity credit with a regional reliability model; the DOE northeastern scenarios illustrate why the result varies.
Ignoring the rest of the grid
Error: Rank plants by plant-gate LCOE while omitting transmission, congestion and curtailment. Correction: Calculate delivered energy and incremental system cost at the intended connection point.
Making universal environmental claims
Error: State that offshore wind always has a particular ecological effect. Correction: Identify the species, habitat, activity and mitigation relevant to the proposed site and lifecycle stage.
A practical decision framework
- Screen with consistent benchmarks. Use the 2025 IRENA table to understand broad generation-cost relationships.
- Shortlist feasible sites. Remove options blocked by resource limits, permitting, water use, seabed conditions, land availability or grid access.
- Model hourly production. Use the same weather year or a documented multi-year set for all candidates.
- Model the network. Include interconnection, congestion, losses, curtailment and required reinforcement.
- Value reliability and flexibility. Add capacity credit, storage, reserves and demand-response interactions.
- Price risk. Test financing, construction delay, commodity, cable, vessel and policy scenarios.
- Complete the environmental review. Quantify or describe site-specific impacts and mitigation obligations.
- Choose the metric that matches the decision. Report LCOE for generation cost, contract value for procurement and system cost plus reliability for portfolio planning.
What a defensible conclusion looks like
A sound conclusion states the scope before the ranking: “For global new projects commissioned in 2025, IRENA’s weighted-average generation cost was USD 78/MWh for offshore wind, versus USD 33/MWh for onshore wind and USD 44/MWh for solar PV.” It then explains what the benchmark omits: local financing, transmission, hourly value, curtailment, capacity contribution and environmental constraints.
For a real grid, the conclusion should identify the winning option under the selected objective and show the conditions that could change it. Offshore wind may lose on plant-level LCOE yet add value through a strong coastal resource, geographic diversity, production during local demand peaks or reduced land-use pressure. Onshore wind or solar PV may remain preferable where land, transmission and permitting are favorable. Hydropower, geothermal and bioenergy can provide different combinations of dispatchability, fuel or resource risk. The comparison is credible only when those differences are measured within the same system boundary.
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