A new study from the Advanced Technology Institute (ATI) at the University of Surrey in the UK finds that solar energy is now the world’s cheapest source of power. It costs as little as £0.02 ($0.027)/kWh in the sunniest countries, making it cheaper than electricity generated from coal, gas, or wind, according to its findings.
With the cost of lithium-ion batteries also declining – having fallen 89% since 2010 – solar and storage systems are now as cost-effective as gas power plants, enabling them as a dispatchable source of power to balance grid demand.
“This economic advantage has shifted the narrative from “why renewables?” to “how fast can we deploy them?” claims the study that provides various other references to prove the claim, including Lazard. In its 18th annual report on levelized cost of energy+, Lazard said that the average LCOE of utility-scale solar PV ranges from $38/MWh to $78/MWh. This is lower than that of gas combined cycle, coal power, and gas peaking (see Lazard Analysis: Utility-Scale Solar, Wind Still Cheapest Power Options).
Recently, an Ember report claimed that solar-led renewables overtook coal in the global power generation for the 1st time in H1 2025 (see Ember: Global Renewables Overtook Coal In H1 2025).
According to the ATI study, falling costs, supportive policies, and technological innovation make solar energy the most cost-effective and scalable solution for global decarbonization as of 2025. China has been instrumental, as it led PV manufacturing to economies of scale, achieving substantial reductions in hardware and component costs.
Apart from China, favorable policy environments elsewhere, primarily the US’s Inflation Reduction Act (IRA), the European Union’s (EU) Green Deal and REPowerEU, and India’s Production Linked Incentive (PLI), provide long-term security to the investors. Countries see solar as reducing their exposure to volatile fossil-fuel markets while generating local jobs that help the cause of solar.
The study also highlights the impact of solar energy in improving energy access and social equity for off-grid populations through its decentralized application, such as in Sub-Saharan Africa and South Asia.
Competitive procurement mechanisms such as renewable energy auctions and long-term power purchase agreements (PPAs) are another contributor to the decline in solar costs. Learning-by-doing effects, thanks to its widespread deployment, have also lowered soft costs related to installation, operation, and maintenance, point out the writers.
“Even here in the UK, a country that sits 50° N of the equator, solar is the cheapest option for large scale energy generation,” said Distinguished Professor, Interim Director - Institute for Sustainability (IfS), Director - Advanced Technology Institute (ATI), and Head of NanoElectronics Centre, Professor S. Ravi P. Silva. “Simply put, this technology is no longer a moonshot prospect, but a foundational part of the resilient low carbon energy future that we all want to bring to reality.”
Having said that, the University of Surrey study underscores the critical challenges that it says must be addressed to ensure solar energy can help achieve global net-zero emissions targets.
One of the biggest challenges relates to the integration of energy storage to support a massive amount of solar energy generation. Storage then should scale up rapidly to keep pace with the accelerating deployment of solar PV. Electricity grids that were designed to accommodate fossil-fuel-based generation, too, need to be spruced up to manage distributed, bi-directional flows of solar PV, especially from rooftop PV systems.
The study emphasizes continued research into next-generation solar technologies like tandem and recyclable panels that can make solar power cleaner and more efficient. It calls for increased investments with both government and industry working together.
“Connecting the growing levels of solar power to electricity networks is now one of the biggest challenges. Smart grids, artificial intelligence forecasting and stronger links between regions will be vital to keep power systems stable as renewable energy use rises,” explains Research Fellow Dr. Ehsan Rezaee.
The University of Surrey says the study has been accepted for publication in the Energy & Environmental Materials journal.
