Lazard: U.S. Utility-Scale Solar LCOE Rises 18% in 2026

The levelized cost of electricity (LCOE) for unsubsidized utility-scale solar in the United States rose 18% in 2026, moving from a range of $38 to $78 per megawatt-hour (USD/MWh) in 2025 to $40 to $98 USD/MWh, Lazard reported in its annual LCOE+ report published on July 13.

The increase breaks a two-decade trend of sustained cost declines in solar technology. While utility-scale solar LCOE has fallen 81% since the first edition of the report, nearly 20 years ago, the combination of elevated interest rates, inflationary pressures, and new tariffs on imported solar equipment and batteries reversed the trajectory over the past year, according to pv magazine. The Lazard report is the reference benchmark that investment banks, project developers, and regulators use to structure auction pricing and power purchase agreements (PPAs) across Latin America, including Mexico, where the Comisión Federal de Electricidad (CFE) and the private sector are negotiating new generation and storage rounds.

The cost increase extends beyond solar. The levelized cost of storage (LCOS) for a 100 MW, four-hour system reached a range of $210 to $292 USD/MWh in 2026, 27% above 2020 levels, driven by tariffs on lithium-ion cells and restrictions on components from foreign entities of concern (FEOC). Onshore wind came in between $37 and $99 USD/MWh, and combined-cycle natural gas climbed to a range of $51 to $129 USD/MWh, its highest level in 15 years. Despite these increases, solar and wind remain the cheapest unsubsidized new generation sources.

Samuel Scroggins, Lazard's head of renewable energy and sustainable infrastructure, noted that utility-scale solar LCOE has fallen 81% over two decades, but warned that the sector has entered a phase where electricity demand outpaces supply and costs are rising across all generation technologies. The full Lazard report, with technology- and region-level breakdowns that inform PPA negotiations across Latin America, is available on the investment bank's website.

This article was drafted with artificial intelligence assistance from verified sources and reviewed by a human editor before publication.