China is driving down clean technology costs. Prices are expected to keep falling this year

The levelized cost of electricity (LCOE) from clean technologies such as wind farms, solar power plants and battery storage is expected to fall by a further 2 to 11% this year, according to a forecast by BloombergNEF (BNEF) researchers. A decline of 22 to 50% is expected by 2035. China is expected to be the main driver of the decline, as it can generate electricity from these sources more cheaply than the rest of the world and also exports clean technologies abroad at low prices.

A forecast published by BNEF researchers shows that, in terms of the levelized cost of electricity, solar and wind power plants already outperform new coal- and gas-fired power plants in almost all the markets studied.

The global levelized cost of electricity from solar power plants fell by 21% last year, as solar modules were sold at or even below production cost. According to BNEF, the solar panel surplus on the market is expected to persist this year, which should bring a further 2% fall in the LCOE of these sources.

"New solar power plants are now cost-competitive with new gas-fired plants in the US, even without subsidies. That is remarkable, given that US gas prices are roughly a quarter of those in Europe or Asia," said report lead author Amar Vasdev.

The levelized cost of electricity from battery storage fell by a third last year to 104 USD/MWh, thanks to a supply chain surplus caused by slower growth in electric mobility. In 2025, BNEF expects the levelized cost of electricity from battery storage to fall below 100 USD/MWh for the first time.

Chinese manufacturers are crushing the competition

According to BNEF, the global decline in the levelized cost of electricity from clean technologies is driven primarily by excess manufacturing capacity in China. The country can produce "clean" electricity 11 to 64% more cheaply than the other countries studied.

"For example, electricity generated by onshore wind farms is 24% cheaper here than the global benchmark of 38 USD/MWh. While wind turbine prices are falling in China, they have risen in the rest of the world since 2020. BNEF's wind turbine price index shows that the costs of individual components will fall in 2025, but manufacturers are likely to keep prices high to improve their margins," BNEF added.

By 2025, BNEF researchers expect the global benchmark LCOE for onshore wind farms to fall by 26%, for offshore wind farms by 22%, for solar power plants by 31%, and for battery storage by as much as 50%.

"China is exporting green technologies so cheaply that the rest of the world is considering building barriers to protect its own industries. But the overall trend of falling costs is so strong that nobody, not even President Trump, can stop it," BNEF added.