A huge decline in solar power cost should occur over the next decade. This is based on what BloombergNEF has predicted; they believe LCOE for utility-scale photovoltaic (PV) projects will drop by almost 30% by the year 2035.
The recently issued BNEF report entitled "Levelized Cost of Electricity 2026" provides a more optimistic look at renewable energy economics for the future although it did acknowledge some uncertainty due to the significant increase in several clean power technologies in 2025 compared to 2024.
BNEF indicates that the global benchmark LCOE for typical fixed-axis solar farms will see a 6% increase between 2024 and 2025 and will average $39/MWh for 2025. This increase in price is seen as a reversal of a decades-long period of declining prices and can be attributed to several factors including lingering supply chain issues, limited/poor resource supply in some areas, and major policy changes in China. For context, at the start of the decade, the benchmark for fixed-axis solar stood at just over $60/MWh, highlighting the substantial savings already banked by the industry.
However, BNEF analysts view this recent increase as a temporary anomaly rather than a reversal of fortunes. Author's report of the forecast is clear: Significant structural forces (i.e. rapid change/innovation, increased global competition) will continue to be present and will have a dramatic downward effect on costs in the coming years. Bloomberg New Energy Finance (BNEF) estimates that between 2018 and 2035 there will be a 30% decline in LCOE for solar and thus consolidates solar as an increasingly viable source of generation for new builds globally.
"There is an intense race to find enough electrons to satisfy increasing demand from the electrification and data center revolutions," said Amar Vasdev, lead author of the report and Senior Associate for Energy Economics at BloombergNEF. The forecast suggests that solar is well-placed to win that race on price.
This long-term cost trajectory aligns solar with broader trends in the clean energy sector. BNEF's analysis projects simultaneous cost reductions across other key technologies, with battery storage LCOE expected to fall by a further 25%, onshore wind by 23%, and offshore wind by 20% over the same period.
Battery Storage Defies the Trend
In stark contrast to the marginal increases seen in solar and wind, 2025 was a landmark year for battery storage. The global benchmark LCOE for a four-hour battery energy storage system (BESS) plummeted by 27% year-on-year to $78/MWh. This represents the lowest cost since BNEF began tracking the technology in 2009, driven by a glut in battery pack supply stemming from manufacturing overcapacity in the electric vehicle market, alongside improved system designs and heightened competition among manufacturers.
The collapsing cost of storage is having an immediate and synergistic effect on solar power. BNEF found that developers added a remarkable 87 gigawatts (GW) of combined solar and storage capacity in 2025, delivering power at a highly competitive average LCOE of $57/MWh. This hybrid model is rapidly changing grid economics.
"As costs continue to drop, we expect battery storage to strengthen solar project revenues, support broader renewable deployment and accelerate the shift toward storage‑led system balancing over fossil-fuel‑based peaking capacity," Vasdev explained.
Fossil Fuels Face Rising Costs
The improving economics of renewables are made even more stark by the deteriorating cost picture for fossil fuel alternatives. In 2025, new-build gas and coal plants saw rising equipment prices, pushing the global LCOE for combined‑cycle gas turbines (CCGTs) up by 16% to a record high of $102/MWh. Surging demand, particularly from the data center boom, has kept gas turbine costs elevated.
This growing cost divergence is reshaping power markets globally. BNEF notes that new solar farms are already undercutting new coal or gas generation in almost all Asia-Pacific markets. In the US, wind power has regained its position as the cheapest source of new generation, while solar is the dominant low-cost option in Southern Europe.
While challenges such as rising global protectionism, grid connection queues, and higher financing costs persist, BNEF's analysis concludes that the underlying trend for solar is clear: innovation and competition will continue to erode costs, making solar energy an increasingly compelling economic proposition as the world races toward the middle of the next decade.
