The levelized cost of energy (LCOE) for utility-scale solar PV has increased slightly year on year due to higher capital costs, interest rates, tariffs, and ongoing supply chain pressures, according to the 2026 Levelized Cost of Energy Report published by US-based financial firm Lazard.
The report compares the LCOE of various electricity generation technologies on a dollar-per-megawatt-hour ($/MWh) basis. Its analysis excludes US federal tax subsidies, carbon pricing, and other policy incentives, while incorporating technology-specific assumptions for fuel costs and cost of capital.
Lazard bankers found that unsubsidized utility-scale solar PV remains among the lowest-cost electricity generation options, with an LCOE range of approximately $40/MWh to $98/MWh, compared with $38/MWh to $78/MWh in 2025. While costs increased year-o-year, the longer-term trend has been mixed. Solar LCOEs rose significantly from 2021 to 2023 following the post-COVID recovery, remained flat or declined slightly from 2023 to 2025, and increased again from 2025 to 2026. Despite the recent increase, the bankers noted that solar continues to maintain a significant cost advantage over most conventional and alternative renewable energy technologies.
Community and commercial and industrial (C&I) solar PV also remain competitive, with an LCOE range of approximately $88/MWh to $197/MWh, while utility-scale solar paired with energy storage has a higher cost range of approximately $61/MWh to $156/MWh, reflecting the additional investment required for dispatchability and grid firming capabilities.
“We’ve been publishing this report for nearly 20 years, and while utility-scale solar LCOEs are up 18% from last year, they remain 81% lower than in our first edition,” Samuel Scroggins, Managing Director and Head of Renewables & Sustainable Infrastructure at Lazard, told pv magazine. “After years of steep cost declines, the market is beginning to see some upward movement, and annual fluctuations are to be expected. But when viewed over the long term rather than year to year, the broader trend remains clear: utility-scale solar LCOEs have fallen by roughly 81% over the past two decades.”
Among other renewable energy technologies, onshore wind is most cost-competitive option, with an LCOE range of approximately $37/MWh to $99/MWh. When combined with storage, costs increase to approximately $49/MWh to $140/MWh due to the added cost of batteries. Offshore wind remains a more expensive renewable option, with an LCOE range of approximately $105/MWh to $167/MWh, driven by higher construction, financing, and infrastructure requirements.
“What wind generally enjoys relative to solar across the United States is a much higher capacity factor while effectively having the same fuel cost, which is zero,” Scroggins explained. “What our analysis does not include, because it is so location-specific, are factors such as transmission costs, land costs, substation upgrades, and permitting expenses. Wind requires more land, so in some cases it could have a higher LCOE than solar in practice. However, that ultimately depends on the specifics of the individual project.”
Lazard’s analysis also shows a notable increase in standalone utility-scale battery storage costs, reversing the declines recorded in previous years. For a 100 MW, four-hour battery storage system, the levelized cost of storage (LCOS) rose to approximately $210/MWh to $292/MWh, reflecting higher capital costs, supply chain constraints, and changing market conditions.
Compared with 2020 levels, storage costs have increased by approximately 27% on a $/MWh basis, representing compound annual growth rates of about 4% to 6%, depending on the metric considered.
“We are starting to see the effects of tariffs on lithium-ion battery imports materialize in costs, and we cite this directly in the report,” Scroggins stated. “Tariffs are beginning to push costs higher. At the same time, restricted access to low-cost Chinese battery cells under the Foreign Entity of Concern (FEOC) provisions is forcing the supply chain to reroute through other countries in Southeast Asia. This cost increases are being passed on to the off-taker.”
New-build conventional generation technologies generally remain more expensive than renewable alternatives. Gas-fired combined-cycle generation (CCGT) continues to be the lowest-cost dispatchable conventional technology, with an LCOE range of approximately $51/MWh to $129/MWh, although costs have risen due to higher construction expenses and broader market pressures.
Coal remains among the least competitive new-build generation options, with an estimated LCOE range of approximately $72/MWh to $177/MWh. New nuclear generation is significantly more expensive, with an LCOE range of approximately $175/MWh to $255/MWh, largely due to high capital requirements and lengthy development timelines.
“Renewable energy is the lowest cost form of new generation despite increasing costs and inflationary pressures across all technologies,” Scroggins said, noting that the United States are currently seeing an “insatiable” power demand environment.
“We are going to need a diverse mix of power generation technologies in the US if electricity demand continues to rise at its current pace,” he added. “That will include significant additions of solar, wind, and natural gas capacity. Our view is that nuclear should also be part of that mix. While it remains an expensive technology, there are specific markets and applications where it can make economic sense. As we build out more nuclear in the United States, the cost would be expected to decline.”
The bankers also explained that, to account for the intermittency of renewable energy, Lazard took into account a “cost of firming intermittency,” which reflects how U.S. grid operators evaluate the effective load carrying capability (ELCC) of resources.
“In simple terms, adding 1 MW of solar capacity does not provide 1 MW of reliable capacity during peak system stress because solar output varies with weather and time of day,” he stressed. “For example, if a grid operator credits 1 MW of solar with only 0.25 MW of dependable capacity, it must secure an additional 0.75 MW of firm capacity from another resource, such as a gas peaking plant. The cost of that additional capacity is then added to the cost of solar as a firming cost.”
“However, even after including this cost, solar remains competitive in many US markets, often falling within — or near the lower end of — the cost range for new natural gas generation,” he concluded.
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