For the first time, building a solar farm with a battery attached is cheaper than constructing a new coal plant in China and a new gas-fired generator in most of the world. The combined cost has dropped to between $54 and $82 per megawatt-hour, according to BloombergNEF’s latest analysis, which tracks record-low battery storage prices across dozens of markets. That range sits below the roughly $65 to $85 per megawatt-hour it costs to build and run a new coal plant in China, and well under the $75 to $115 range typical of new combined-cycle gas turbines outside the handful of countries with ultra-cheap domestic gas supplies.
The milestone, confirmed in BloombergNEF’s first-half 2025 levelized cost of energy update and broadly consistent with IRENA’s 2023 cost data released in September 2024, marks a turning point that grid planners and energy investors can no longer treat as theoretical. Utilities that approve new fossil fuel capacity today risk locking ratepayers into higher costs for 30 years or more while the alternative keeps getting cheaper.
Why batteries changed the math
Solar panels alone have been cheaper than new fossil plants in sunny regions for several years. What held back the comparison was storage: without batteries, solar generation disappears at sunset, and grid operators still needed gas or coal to fill the gap. That limitation has now been priced away.
Lithium-ion battery pack prices fell below $140 per kilowatt-hour in 2024, according to BloombergNEF, continuing a decline that has cut costs by more than 80% since 2015. The drop reflects massive manufacturing scale-up in China, where companies like CATL and BYD have built gigafactories that now produce more battery capacity than the rest of the world combined. Balance-of-system costs for storage projects, including inverters, enclosures, and grid connection hardware, have fallen in parallel.
Notably, the cost of other clean energy technologies actually rose slightly during the same period, driven by higher steel, copper, and labor costs. That split is important: the solar-plus-storage price advantage is not simply a product of cheaper panels. It is the storage side of the equation that has moved fast enough to offset headwinds elsewhere in the supply chain, producing a combined system that can generate and dispatch electricity on demand at a cost competitive with new-build fossil plants.
The $54 to $82 range covers a wide band of project conditions. Solar irradiance, land costs, financing terms, and the duration of storage paired with each installation all matter. At the low end, projects in high-sun regions like Chile’s Atacama Desert, Australia’s Queensland, or India’s Rajasthan approach costs that were unthinkable five years ago. At the upper end, the figure still undercuts new gas turbines in most countries outside the United States and parts of the Middle East, where cheap domestic gas keeps fossil generation artificially competitive.
China is the critical test
China installed more solar capacity in 2023 than the entire world did in 2022, adding roughly 217 gigawatts in a single year according to the country’s National Energy Administration. It is simultaneously the world’s largest builder of coal plants, with provincial governments continuing to approve new coal capacity for grid reliability and local employment.
When solar-plus-storage undercuts new coal on a levelized cost basis within China itself, the financial logic for those approvals weakens. Provincial planners can no longer argue that coal is the cheapest option for new capacity. The tension between falling renewable costs and continued coal permitting is one of the defining contradictions in global climate policy, and the latest cost data sharpens it considerably.
That said, China’s actual project costs can diverge from global benchmarks. Domestic subsidy structures, state-owned enterprise pricing, land allocation policies, and grid curtailment rates that reduce effective solar output all introduce variables. A solar-plus-storage project that looks competitive on paper may face real-world obstacles, including connection delays and higher financing costs in less-developed provinces, that push its effective cost above the headline range. Independent verification from Chinese energy authorities or auditors would strengthen the comparison.
Where the numbers still carry caveats
The claim that solar-plus-storage beats new gas “almost everywhere” compresses a complex landscape into a single phrase. Gas prices remain volatile and regionally fragmented. Countries that import liquefied natural gas at spot prices, such as Japan, South Korea, and much of Southeast Asia, face gas-fired electricity costs well above $100 per megawatt-hour, making the solar-plus-storage advantage clear. But nations with abundant domestic gas, including the United States, Qatar, and parts of Central Asia, can still build gas plants at costs that compete with or beat the lower end of the solar-plus-storage range.
Storage duration introduces another layer of uncertainty. The $54 to $82 range likely assumes four-hour lithium-ion battery systems, which can handle evening peak demand but cannot fully replace a gas plant that runs overnight or through multi-day weather events. Longer-duration technologies, such as iron-air batteries, flow batteries, or compressed air storage, remain more expensive and less proven at scale. Extending storage to eight or twelve hours would push costs higher and narrow the advantage over fossil generation with current technology.
Supply chain concentration also deserves scrutiny. China dominates lithium-ion battery manufacturing and controls significant shares of lithium, cobalt, and graphite processing. Trade tensions, export restrictions, or disruptions at key facilities could slow cost declines or reverse them temporarily. The U.S. Inflation Reduction Act and the EU’s Critical Raw Materials Act both aim to diversify battery supply chains, but those efforts will take years to produce results at scale.
Finally, market design and policy shape whether cost advantages on paper translate into investment decisions on the ground. Capacity payments, grid access rules, and carbon pricing (or the lack of it) all influence project economics. In some jurisdictions, regulations still favor conventional generators by rewarding fuel-based plants for reliability services that batteries can also provide but are not yet compensated for. Until those market structures evolve, the economic edge suggested by levelized cost comparisons may not fully reach consumers.
What this means for fossil fuel investment decisions
The validated production modeling that underpins these comparisons has a strong scientific foundation. Peer-reviewed research published in the journal Energy established methods for simulating hourly solar PV output using three decades of weather data, and a companion study applied bias-corrected reanalysis to wind power simulation. These tools, used by organizations like IRENA and the IEA to model “firm” renewable power, provide the hourly generation profiles that make levelized cost calculations credible rather than speculative. Combined with BloombergNEF’s project-level cost tracking, which draws on actual contract prices and equipment costs rather than theoretical projections, the evidence base is robust enough to inform real investment decisions.
For policymakers, the implication as of mid-2026 is straightforward: every proposed fossil fuel plant should be evaluated against current solar-plus-storage benchmarks, not cost assumptions from even two or three years ago. The IEA’s World Energy Outlook 2024 projected that renewables would supply more than half of global electricity by the early 2030s under stated policies. The latest cost data suggests that timeline could accelerate if storage prices continue their current trajectory.
For utilities and investors, the risk calculus has shifted. A new gas plant approved today will operate for 25 to 40 years. If solar-plus-storage costs fall another 20 to 30% over the next decade, as BloombergNEF’s learning curve models suggest is plausible, that gas plant becomes a stranded asset well before the end of its economic life. The same logic applies with even greater force to new coal, which faces both higher operating costs and growing carbon liability.
None of this guarantees that every planned fossil project will be cancelled. Political priorities, industrial interests, and short-term reliability concerns can still override cost logic, especially where institutions are weak or climate policy is contested. But the historical rationale for building new coal and gas, the assumption that fossil fuels were simply cheaper and more reliable, has eroded faster than most forecasters expected. The burden of proof has shifted: it now falls on fossil fuel proponents to explain why their projects make economic sense in a world where the sun and a battery can do the job for less.
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*This article was researched with the help of AI, with human editors creating the final content.
