Utility scale solar reaches LCOE of $0.028-$0.041/kWh in the US, Lazard finds

Lazard’s newly released Levelized Cost of Energy Analysis 15.0 and Storage 7.0 reports that solar and wind are the most competitive electricity sources in the US energy market. According to the investment bank’s 2021 study, gas combined cycle has the lowest LCOE of $0.045-$0.074/kWh among the conventional sources and that of coal and nuclear is $0.065-$0.152/kWh and $0.131-$0.204/kWh, respectively.

November 5, 2021

Last week, US-based Lazard released its Levelized Cost of Energy (LCOE) analysis version 15.0 for Energy and Version 7.0 for Energy Storage.

According to the investment bank, utility-scale solar, both thin-film and crystalline silicon, as well as wind have, in the United States, the lowest LCOE of all sources considered, as in last year’s report.

The LCOE of unsubsidized large-scale PV based on crystalline silicon is estimated at $0.030-$0.042/kWh and that of grid-parity thin-film solar plants at $0.028-$0.037/kWh. For comparison, in 2020 Lazard reported that crystalline silicon achieved $0.031-$0.042/kWh and thin-film $0.029-$0.038/kWh.

The LCOE for residential PV is indicated at $0.147-$0.221/kWh and that of commercial and industrial rooftop solar at $0.067-$0.180/kWh.

Wind is still the cheapest electricity source with an LCOE of $0.026-$0.050/kWh, which is slightly lower than $0.026-$0.054/kWh last year. The cost decline for utility-scale solar, however, continues to be higher than that for onshore wind, Lazard emphasized.

Combined cycle gas has the lowest LCOE of $0.045-$0.074/kWh among conventional sources and that of coal and nuclear is $0.065-$0.152/kWh and $0.131-$0.204/kWh, respectively.

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“When US government subsidies are included, the cost of onshore wind and utility-scale solar continues to be competitive with the marginal cost of coal, nuclear and combined cycle gas generation,” Lazard said. Including these values, solar reaches an LCOE of $0.027/kWh and wind of $0.025/kWh, while coal and nuclear power achieve $0.042/kWh and $0.024/kWh, respectively.

As for the levelized cost of storage (LCOS) in the US market, Lazard reports that unsubsidized storage projects operating on the spot market and with a capacity of 100 MW/100 MWh are able to deliver a value of $0.160-$0.279/kWh, while facilities with capacities of 100 MW/200 MWh and 100 MW/400 MW can reach $0.146-$0.257/kWh and $0.131-$0.232/kWh, respectively. Solar-plus-storage with a capacity of 50 MW/200 MWh is estimated to reach $0.085-$0.158/kWh.

In the residential segment, solar-plus-storage installations are said to achieve $0.416-$0.621/kWh and for the commercial segment this value is estimated at $0.235-$0.335/kWh.

*The article has been updated on November 5 to reflect that Lazard is an investment bank and not a consultancy.

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