September 27, 2024 Patrick Jowett

The globalized weighted average levelized cost of electricity (LCOE) of utility-scale solar plants stood at $0.044/kWh in 2023, according to a report from the International Renewable Energy Agency (IRENA).

The report says the result represents a 12% year-on-year (YoY) decrease, compared to a 3% YoY decrease between 2021 and 2022. In 2010, the figure stood at $0.460/kWh, meaning the weighted average LCOE has fallen by 90% since the start of the last decade.

IRENA’s report says the “remarkable, sustained and dramatic decline is one of the more compelling stories in the power generation sector’s evolution over the past decade.” It attributes the decline to a rapid drop in installation costs, increasing capacity factors and falling operation and maintenance (O&M) costs. 

The decline in solar module costs is said to have contributed 45% to the LCOE reduction of utility-scale PV since 2010, while inverters contributed another 9%. Racking, mounting and other BoS hardware contributed a further 9%. 

Engineering, procurement and construction, installation and development costs and other soft costs were responsible for 28% of the LCOE decline, IRENA says, with the rest of the reduction attributed to improved financing conditions as markets have matured, reduced O&M costs and an increased global weighted average capacity factor, driven by a shift to sunnier markets.

Analysis of selected countries where historical data is available shows the weighted average LCOE of utility-scale solar declined between 2010 and 2023 by between 76%, as seen in the US, up to 93%, as seen in Australia and the Republic of Korea.

The lowest weighted average LCOEs in 2023 were recorded in Australia ($0.034/kWh) and China ($0.036/kWh), the latter of which saw a 14% YoY decline.

The US had a weighted average LCOE of $0.057/kWh for solar in 2023, a 3% YoY decline and 33% above the global weighted average. The Netherlands experienced the greatest YoY decline last year, recording $0.059/kWh in 2023 for a drop of 35%.

India’s LCOE increased 26% in 2023, to $0.048/kWh, which IRENA says was the fourth most competitive cost of the year. Greece saw the largest LCOE increase of the analyzed countries, at 42%, followed by Canada (36%) and Germany (28%).

IRENA’s report also highlights that the cost of crystalline solar PV modules sold in Europe declined by 93% between December 2009 and December 2023.

Meanwhile, the global capacity weighted average of total installed cost of projects commissioned in 2023 stood at $758/kW, 86% lower than in 2010 and 17% lower than in 2022.

IRENA also found the global weighted average capacity factor for new, utility-scale solar PV increased from 13.8% in 2010 to 16.2% in 2023. 

“This change resulted from the combined effect of evolving inverter load ratios, a shift in average market irradiance and the expanded use of trackers – driven largely by increased adoption of bifacial technologies – that unlock solar PV’s use in more latitudes,” the report says.

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