New wind and solar farms are already undercutting new coal and gas plants on production cost in almost every market globally, according to the latest Bloomberg New Energy Finance (BloombergNEF or BNEF) report. In 2024, the cost of a typical fixed-axis solar farm declined by 21% globally, while solar modules were sold at or below the cost of production. Overcapacity is not likely to ease in the solar industry this year as well leading to the global benchmark LCOE for solar generation to decline by 2% from €36/MWh in 2024 to €35/MWh in 2025. In 2035, it is further likely to drop down to €25/MWh, claim the analysts. “New solar plants, even without subsidies, are within touching distance of new US gas plants. This is remarkable because US gas prices are only a quarter of prevailing gas prices in Europe and Asia. It really raises the bar on what is possible even in the current market,” said Lead Author of the report Amar Vasdev. He adds, “This opens up the likelihood that solar will become even more compelling in the coming years, especially if the US starts exporting liquified natural gas and exposes its protected gas market to global price competition.”In comparison, the LCOE of onshore wind will decline by 4% year-on-year (YoY) in 2025 to €37/MWh, going down to €28/MWh in 2035, according to the BNEF report Levelized Cost of Electricity or LCOE. Offshore wind LCOE is likely to settle at around €67/MWh in 2035 from €67/MWh in 2024. BNEF forecasts battery storage to cross the ‘watershed’ $100/MWh in 2025 with a decline of 11% YoY in its LCOE from €104/MWh in 2024 to €93/MWh this year. In 2035, the same will settle down to €53/MWh, according to its estimates. Analysts attribute China’s economies of scale clean-tech manufacturing capacity as the key driver behind cost declines last year, something that’s not likely to change anytime soon.Import tariffs being imposed by governments around the globe to check Chinese overcapacity concerns may stall cost declines, albeit temporarily. On the whole, in 2025, BNEF sees the cost of clean power technologies including solar, wind and battery storage is likely to fall by another 2% to 11%, breaking the record of last year. For 2035, they see the global benchmark LCOEs going down 31% for fixed-axis PV, 26% for onshore wind, 22% for offshore wind, and close to 50% for battery storage. “China is exporting green energy tech so cheaply that the rest of the world is thinking about erecting barriers to protect their own industries,” said Matthias Kimmel, head of Energy Economics at BNEF. “But the overall trend in cost reductions is so strong that nobody, not even President Trump, will be able to halt it.” Recently, speaking at a TaiyangNews Webinar on Solar Market 2024 Review & 2025 Outlook, BNEF’s Jenny Chase said the world installed 599 GW DC of new PV in 2024, and is expected to add another 670 GW DC to 700 GW DC (see BloombergNEF Forecasts 670 GW DC New Global Solar PV Installations In 2025 During TaiyangNews Event).
