Utility-scale solar costs fell by 7% in the past year, according to latest annual studies by global asset manager Lazard.
Those for onshore wind fell by 3.5%, Lazard’s annual Levelized Cost of Energy Analysis (LCoE 13.0) found.
Onshore wind and utility-scale solar, which are cost-competitive with conventional generation on a new-build basis, continue to maintain competitiveness with the marginal cost of existing conventional generation, according to Lazard.
However, while the reductions in costs continue, their rate of decline has slowed, especially for onshore wind, the analysis found.
Costs for utility-scale solar have been falling more rapidly – about 13% annually – compared with onshore wind – about 7% annually – over the past five years.
When US government subsidies are included, the cost of building new onshore wind and utility-scale solar, with values averaging $28 per megawatt hour (MWh) and $36/MWh, respectively, is competitive with the marginal cost of coal and nuclear generation, with values averaging $34/MWh and $29/MWh, respectively.
“Regional differences in resource availability and fuel costs can drive meaningful variance in the LCoE of certain technologies, although some of this variance can be mitigated by adjustments to a project’s capital structure, reflecting the availability, and cost, of debt and equity,” Lazard stated.
Lazard’s latest annual Levelized Cost of Storage Analysis (LCoS 5.0) shows that storage costs, particularly those using lithium-ion battery technology, have continued to decline faster, compared with alternative storage technologies.
Lithium-ion, particularly for shorter duration applications, remains the least expensive of energy storage technologies analysed and continues to decrease in cost, thanks to improving efficiencies and a maturing supply chain, according to the Lazard’s study.
Solar photovoltaic plus storage is “economically attractive” for short-duration wholesale and commercial use cases, but remain “challenged” for residential and longer-duration wholesale use cases.