The economics of renewable energy paired with battery storage have reached a historic tipping point. According to Lazard latest Levelized Cost of Energy analysis released this week, the all-in cost of solar photovoltaic systems combined with four-hour lithium-ion battery storage has fallen to $36-42 per megawatt-hour in the most favorable US markets, officially undercutting the cost of new natural gas combined-cycle plants.
This milestone has been anticipated for years, but the speed of the decline has surprised even optimistic forecasters. Just three years ago, Lazard estimated solar-plus-storage costs at $56-76/MWh. The 40% reduction reflects simultaneous improvements in both solar panel efficiency and battery prices. Solar module costs have fallen to approximately $0.15 per watt, while lithium-ion battery pack prices have dropped below $100 per kilowatt-hour for the first time.
The impact is already visible in utility procurement decisions. In 2025, approximately 78% of new power generation capacity additions in the United States included a storage component, up from 45% in 2023. Major utilities including NextEra Energy, AES Corporation, and Duke Energy have all announced accelerated storage deployment plans in response to the improving economics.
The cost crossover has profound implications for the energy transition. Natural gas peaker plants, which provide electricity during periods of high demand, have long been considered essential for grid reliability. With solar-plus-storage now cheaper and capable of providing similar dispatchable capacity, the economic rationale for new gas plant construction has essentially evaporated in most US markets.
Looking ahead, analysts expect costs to continue declining. BloombergNEF projects that solar-plus-storage costs will fall to $25-30/MWh by 2030, driven by continued improvements in battery chemistry, manufacturing scale, and solar cell efficiency. At those price points, the combination would be competitive with existing gas plants operating costs, potentially accelerating the retirement of fossil fuel generation across the developed world.
