The latest report from financial firm Lazard indicates that the levelized cost of energy for utility-scale solar and battery storage has risen over the past year. Driven by higher capital expenses, interest rates, and supply chain pressures, the cost of standalone utility-scale battery storage has climbed 27% since 2020. Despite these recent inflationary trends, utility-scale solar remains one of the most cost-competitive electricity generation options available. Lazard’s analysis highlights that while annual fluctuations occur, the long-term trajectory shows that solar costs have decreased by approximately 81% over the last two decades.
Lazard’s “2026 Levelized Cost of Energy Report” evaluates various power generation technologies on a dollar-per-megawatt-hour basis, excluding federal tax subsidies and policy incentives. Utility-scale solar currently sits in an LCOE range of approximately $40/MWh to $98/MWh. When paired with energy storage to provide dispatchability and grid firming, the cost range increases to between $61/MWh and $156/MWh. Community and commercial solar projects also remain competitive, with costs ranging from $88/MWh to $197/MWh.
The report notes a reversal in the previous downward trend for battery storage costs. For a 100 MW, four-hour system, the levelized cost of storage has risen to between $210/MWh and $292/MWh. Samuel Scroggins, managing director at Lazard, attributed this shift to the impact of tariffs on lithium-ion battery imports and restricted access to lower-cost Chinese battery cells due to Foreign Entity of Concern provisions. These supply chain shifts have forced rerouting through Southeast Asia, resulting in higher costs for offtakers.
Compared to renewable options, conventional generation remains generally more expensive. Gas-fired combined-cycle generation ranges from $51/MWh to $129/MWh, while coal remains less competitive at $72/MWh to $177/MWh. New nuclear generation is the most expensive option analyzed, with costs between $175/MWh and $255/MWh. Lazard emphasizes that even when accounting for the “cost of firming intermittency”—the expense required to back up variable solar output with reliable capacity—solar remains competitive with new natural gas generation in many U.S. markets.