LCOE of grid-scale solar expected to drop 2% globally in 2025
A report from BloombergNEF forecasts that the levelized cost of electricity (LCOE) of grid-scale solar and battery energy storage is expected to decline globally in 2025.
LCOE is a metric that enables different technologies to be compared on a cost basis. The metric measures lifetime costs divided by energy production. LCOE calculates the present value of the total cost of building and operating a power plant over an assumed lifetime.
BloombergNEF expects fixed-axis utility-scale solar project LCOE to decline 2% year-over-year, declining from $36 per MWh to $35 per MWh. It forecasts that by 2035, LCOE will continue to decline to $25 per MWh, or a drop of about 31%.
Battery energy storage is also forecast to decline in LCOE, falling 11% from $104 per MWh in 2024 to $93 per MWh in 2025. Ten years later, BloombergNEF expects battery energy storage to reach $53 per MWh, nearly half of what it is today.
The cost of a typical fixed-axis solar farm fell by 21% globally in 2024, the report said. Modules were sold at or below the cost of production, with no signs of the overcapacity in the solar supply chain easing in 2025, it said.
“New solar plants, even without subsidies, are within touching distance of new U.S. gas plants,” the report said. “This opens up the likelihood that solar will become even more compelling in the coming years, especially if the U.S. starts exporting liquified natural gas and exposes its protected gas market to global price competition.”
BloombergNEF said trade barriers and protectionism could temporarily stall clean energy cost declines, but it expects a 22% to 49% drop in LCOE by 2035.
“China is exporting green energy tech so cheaply that the rest of the world is thinking about erecting barriers to protect their own industries, said Matthias Kimmel, head of energy economics at BloombergNEF. “But the overall trend in cost reductions is so strong that nobody, not even President Trump, will be able to halt it.”
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