Lazard study shows continued decline in solar power costs

Dec 16, 2016 12:56 CET by Plamena Tisheva

December 16 – The cost of generating electricity from photovoltaic (PV) technology continues to decline, according to a new study by Lazard Ltd (NYSE:LAZ), which showed smaller cost declines for other renewable technologies.

The financial advisory and asset management firm also said that battery storage costs are falling but there are wide variations depending on the type of application and battery technology. For instance, the median cost of using lithium-ion technologies fell from last year by about 12%, 24% and 11%, respectively, for peaker replacement, transmission investment deferral and residential use cases.

“The economic viability of commercial energy storage systems varies widely by application and on a regional basis,” said Jonathan Mir, head of Lazard’s North American Power Group. “As manufacturers and customers identify optimal technologies for different use cases, we expect further innovation and a continued drop in costs, which will help drive increased use of renewables,” Mir added.

The median levelised cost of energy (LCOE) for utility-scale PV is down about 11% from last year and for rooftop residential PV — about 26%, according to Lazard’s latest annual Levelized Cost of Energy Analysis. The firm said that residential solar is nevertheless still not cost competitive without subsidies and policy support.

The costs of other renewable sources such as onshore wind, geothermal and biomass declined “only at the margins” from last year, which Lazard said reflected the maturing of technology as well as relatively low level of investment. The median cost for offshore wind power, meanwhile, dropped 22%, but it remains substantially more expensive than onshore wind, especially in the US, the firm added.

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