A new report from Lazard compares the levelized cost of energy (LCOE) of different generation technologies on a dollar/MWh basis. It shows that at the energy scale, the LCOE for solar and onshore wind increased for the first time in 2023, from $24/MWh to $96/MWh for solar and from $24/MWh to $75/MWh for wind. Nevertheless, these two renewable energy sources are still economic leaders compared to nuclear power, gas and coal.
The report provides a comparative LCOE analysis of various generation technologies on a $/MWh basis, excluding US federal tax subsidies, fuel prices, carbon pricing and capital costs. The report also includes, for the first time, a cost-consolidation-periodicity analysis. Unlike previous years, the LCOE for utility-scale solar ignores thin-film technology and focuses only on crystalline silicon.
In a basic comparison, without taking into account subsidies, fuel prices or carbon pricing, utility-scale solar and wind have the lowest LCOE of all sources. Utility solar costs $24/MWh to $96/MWh, while onshore wind has the lowest LCOE in the shortest range, from $24/MWh to $75/MWh. The LCOE of offshore wind varies between USD 72/MWh and USD 140/MWh.
By comparison, using the same criteria, gas peak is $115/MWh to $221/MWh, nuclear is $141/MWh to $221/MWh, coal is $68/MWh to $166/MWh, and gas combined cycle is $39/MWh. $101/MWh according to Lazard.
The LCOE of unsubsidized residential rooftop electricity is $117-$282/MWh, while the LCOE of community and commercial and industrial (C&I) solar is $49-$185/MWh. Taking into account federal tax subsidies under the US Inflation Reduction Act, including domestic competition provisions, the cost of rooftop electricity is $74/MWh – $229/MWh and community/C&I rooftop electricity is $32/MWh – $155/MWh.
For the first time in the history of Lazard’s analysis, the average LCOE for both utility-scale solar and onshore wind increased. Inflation, supply chain challenges and the global energy crisis all played a role in stalling the solar “race”. Nevertheless, Lazard notes that “LCOEs for best-in-class onshore wind and utility-scale solar have fallen at the bottom of our cost segment, which may catalyze ongoing consolidation across the sector.”
The LCOE range for useful solar power in 2021 was very small, 30-41 USD/MWh. In 2023, it ranged from $24/MWh to $96/MWh, increasing the average LCOE.
Lazard estimates that between 2016 and 2023, LCOE for commercial vehicle solar will increase by 3%, calculated as the average percentage increase at the top and bottom of the LCOE range. However, between 2009 and 2023, the LCOE of solar energy fell by 84% according to the same metric.
The new report also includes an analysis of the levelized price of storage and hydrogen, which pv magazine are discussed in separate articles.