The International Renewable Energy Agency (IRENA) says the result represents a decline of 12% year-on-year. Since the beginning of 2010, this figure has fallen by 90%.
According to a report from the International Renewable Energy Agency (IRENA), the globalized weighted average levelized electricity cost (LCOE) of utility-scale solar power plants was $0.044/kWh in 2023.
The report says the result represents a 12% year-on-year decline, compared to a 3% year-on-year decline between 2021 and 2022. In 2010, this figure was $0.460/kWh, meaning the weighted average LCOE has fallen by 90% since beginning of the last decade.
IRENA’s report says the “remarkable, sustained and dramatic decline is one of the most compelling stories in the evolution of the power generation sector over the past decade.” It attributes the decline to a rapid decline in installation costs, increasing capacity factors and declining operation and maintenance (O&M) costs.
The decline in solar panel costs would have contributed 45% to the LCOE reduction of utility-scale PV since 2010, with inverters contributing another 9%. Racks, mounting, and other BoS hardware contributed another 9%.
Engineering, procurement and construction costs, installation and development costs and other soft costs accounted for 28% of the LCOE decline, IRENA says, while the remainder of the reduction was attributed to improved financing conditions as markets matured, O&M costs and a higher global weighted average capacity factor, driven by a shift to sunnier markets.
Analysis of selected countries where historical data is available shows that the weighted average LCOE of utility-scale solar fell by 76%, as in the US, to 93%, as in Australia and the Republic of Korea, between 2010 and 2023.
The lowest weighted average LCOEs in 2023 were recorded in Australia ($0.034/kWh) and China ($0.036/kWh), with the latter experiencing a 14% year-on-year decline.
The US had a weighted average LCOE of $0.057/kWh for solar in 2023, down 3% year-over-year and 33% above the global weighted average. The Netherlands saw the largest year-on-year decline last year, with a decline of $0.059/kWh in 2023, a decline of 35%.
India’s LCOE rose 26% to $0.048/kWh in 2023, which was the fourth most competitive cost of the year, according to IRENA. Greece had the largest LCOE increase of the countries analyzed, at 42%, followed by Canada (36%) and Germany (28%).
IRENA’s report also highlights that the cost of crystalline solar panels sold in Europe fell by 93% between December 2009 and December 2023.
Meanwhile, the global capacity-weighted average of total installed costs of projects commissioned in 2023 was $758/kW, 86% lower than in 2010 and 17% lower than in 2022.
IRENA also found that the global weighted average capacity factor for new utility-scale solar increased from 13.8% in 2010 to 16.2% in 2023.
“This change is the result of the combined effect of changing inverter load ratios, a shift in average market irradiance and the increased use of trackers – largely driven by the increased adoption of bifacial technologies – which are driving the use of solar energy at more latitudes possible,” the report said.
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