Costs of utility-scale solar projects fell by 9%, Lazard’s analysis finds

Latest figures released by financial advisory and asset management firm Lazard in its annual in-depth studies, comparing the costs of energy from various generation technologies and of energy storage technologies for different applications, show that the cost of renewable energy continues to decline and maintain competitiveness with the marginal cost of existing conventional generation technologies driven by, among other factors, decreasing capital costs, improving technologies and increased competition.

This year’s Levelized Cost of Energy Analysis (LCOE 14.0)  finds that the cost of generating energy from utility-scale solar projects fell by 2% and 9%, respectively, over the past year.

The analysis reveals that costs for utility-scale solar have been falling more rapidly by about 11% per year, compared to onshore wind which fell 5% per year over the past five years.

It also shows that the cost of utility-scale solar and onshore wind is competitive with the marginal cost of coal, nuclear and combined cycle gas generation when U.S. government subsidies are included.

The former values average $31/MWh for utility-scale solar and $26/MWh for utility-scale wind, while the latter values average $41/MWh for coal, $29/MWh for nuclear, and $28/MWh for combined-cycle gas generation.



George Bilicic, Vice Chairman and Global Head of Lazard’s Power, Energy & Infrastructure Group  remarked:

“As the costs of utility-scale wind and solar continue to decline and compete with the marginal cost of conventional energy generation, the focus remains on tackling the challenge of intermittency.”

Lazard’s data on energy storage costs published in its Levelized Cost of Storage Analysis (LCOS 6.0) shows that long-duration storage is gaining traction as a commercially viable solution to challenges created by intermittent energy resources such as solar or wind.

The report also reveals that project economics analyzed for standalone behind-the-meter applications remain relatively expensive without subsidies, while utility-scale solar PV + storage systems are becoming increasingly attractive.

Lazard’s analysis highlights that storage costs have declined across most use cases and technologies, particularly for shorter-duration applications, in part driven by evolving preferences in the industry regarding battery chemistry.

Lithium-ion chemistries continue to be the dominant storage technology for short-duration applications, representing around 90% of the market. Competing technologies are less attractive for most applications given Lithium-ion’s advantages in commercial acceptance, price, energy density and availability.

The cost declines were more pronounced for storage modules than for balance of system components or ongoing operations and maintenance expenses.

Source: Press release by Lazard Ltd.