Renewable Energy
Solar is now the cheapest source of new electricity in most markets
Module prices fell again in 2026, pushing utility-scale solar below new coal and gas in more than 80 countries. Grid connection queues, not cost, are the main constraint.
By Dr. Anya Raman · · 6 min read · Updated
Key takeaways
- Utility-scale solar is now the lowest-cost source of new electricity in more than 80 countries.
- Module prices, not policy subsidies, drove the most recent cost decline.
- Grid connection queues and permitting are now the binding constraint on deployment.
What the data shows
Levelised cost of electricity (LCOE) measures the average cost of generating one megawatt-hour over a plant's lifetime. On this measure, utility-scale solar has fallen faster than any other generation technology over the past decade, driven by manufacturing scale, higher cell efficiency, and cheaper capital equipment.
In most markets with reasonable irradiance, a new solar plant now produces electricity at a lower cost than a newly built coal or gas plant, even before carbon pricing is applied. Where solar is paired with battery storage, the combined cost is competitive with new gas peaking capacity in a growing number of grids.
Why cost is no longer the bottleneck
Falling costs have shifted the constraint from economics to infrastructure. Interconnection queues in Europe, the United States, and India now hold multiples of the capacity that is actually built each year, because transmission planning and grid upgrades run on longer timelines than solar construction.
Permitting timelines, land use rules, and local grid capacity determine how quickly cheap generation reaches consumers. Countries that have simplified interconnection studies and invested early in transmission are converting low costs into delivered electricity fastest.
What to watch next
Three indicators matter over the next two years: the pace of transmission build-out, the cost trajectory of grid-scale storage, and how wholesale market design rewards flexibility rather than raw capacity.