The globalised weighted average levelised cost of electricity (LCOE) of utility-scale solar plants stood at $0.064/kWh (USD 0.044/kWh) in 2023 with that figure reaching $0.049/kWh (USD 0.034/kWh) in Australia, according to a report from the International Renewable Energy Agency (IRENA).
The report says the globalised result represents a 12% year-on-year (YoY) decrease, compared to a 3% YoY decrease between 2021 and 2022. The figure has fallen 90% since the start of 2010. when the figure stood at $0.67/kWh (USD 0.460/kWh).
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 United States, and up to 93% in Australia and the Republic of Korea.
Australia had the lowest weighted average LCOE in 2023 with $0.049/kWh (USD 0.034/kWh), 22% lower than the global weighted average.
China had a weighted average LCOE of $0.052/kWh (USD 0.036/kWh) for solar in 2023, a 14% YoY decline, while the United States had a weighted average LCOE of $0.083/kWh (USD 0.057/kWh), a 3% YoY decline and 33% above the global weighted average. The Netherlands experienced the greatest YoY decline last year, recording $0.085/kWh (USD 0.059/kWh) in 2023 for a drop of 35%.
India’s LCOE increased 26% in 2023, to $0.070/kWh (USD 0.048/kWh), which IRENA says was the fourth most competitive cost of the year. Greece saw the largest LCOE increase of the analysed countries, at 42%, followed by Canada (36%) and Germany (28%).
IRENA’s report also highlights that the global capacity weighted average of total installed cost of projects commissioned in 2023 stood at $1,098/kWh (USD 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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