The latest report by U.S. financial analyst Lazard on levelized cost of electricity (LCOE) shows solar remains one of the lowest cost sources of power generation.
With utility-scale PV having an LCOE range of $29-92/MWh, it comes in at a close second to onshore wind, at $27-73/MWh, and significantly lower cost than many fossil fuel sources, such as gas peaking and coal.
According to Lazard’s figures, utility-scale PV has experienced the greatest decline in average LCOE — specifically, an 83% decline since 2009.
Lazard’s report details that falling LCOE in the solar industry is largely contained to the utility-scale sector. Community, commercial and industrial-scale solar projects had an LCOE range of $54-191/MWh; utility-scale solar-plus-storage projects had a range of $60-210/MWh; and rooftop residential solar had a range of $122-284/MWh.
The report also notes that fossil fuel will still play a role as “diverse generation fleets will be required” to meet energy demand.
Lazard’s findings demonstrate that the federal solar Investment Tax Credit (ITC) and Production Tax Credit (PTC) implemented as part of the Inflation Reduction Act (IRA) are fulfilling their intended purpose by encouraging the development of new solar projects in the U.S., such as one developed by Ørsted that closed financing last month.
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