Author: PPD Team Date: 07/02/2025
A BloombergNEF report forecasts a decline in the levelized cost of electricity (LCOE) for grid-scale solar and battery energy storage in 2025. LCOE, which measures lifetime costs divided by energy production, enables cost comparisons across energy technologies.
The report projects that the LCOE of fixed-axis utility-scale solar projects will decline 2% year-over-year, from $36 per MWh in 2024 to $35 per MWh in 2025. By 2035, this is expected to fall further to $25 per MWh, marking a 31% drop. Battery energy storage LCOE is also forecast to decline, falling 11% from $104 per MWh in 2024 to $93 per MWh in 2025, with a further reduction to $53 per MWh by 2035—nearly half of today’s cost.
The report noted that the cost of a typical fixed-axis solar farm fell 21% globally in 2024, as module prices reached or dropped below production costs. It also highlighted that overcapacity in the solar supply chain shows no signs of easing in 2025.
BloombergNEF stated that new solar plants, even without subsidies, are approaching cost parity with new gas plants in the U.S. This trend could accelerate solar adoption, particularly if U.S. liquefied natural gas exports expose domestic gas prices to global competition.
While trade barriers and protectionism could temporarily slow cost declines, BloombergNEF expects LCOE reductions of 22% to 49% by 2035. Matthias Kimmel, head of energy economics at BloombergNEF, said China’s low-cost green energy exports are prompting other countries to consider protective measures but emphasized that the downward cost trend remains strong.
Photo Credit: BloombergNEF