Solar plus storage costs plunge outside China and US, reshaping renewable energy economics

A new analysis by energy think tank Ember signals a watershed moment for solar-plus-storage: utility-scale batteries, outside China and the United States, now cost around $65 per megawatt-hour (MWh) to store electricity as of October 2025, making dispatchable solar broadly economically feasible.

According to the original report, Ember’s assessment draws on recent auction results in Italy, Saudi Arabia and India and interviews with active developers across global markets. The think tank calculates a full grid‑connected battery system cost of roughly $125 per kilowatt-hour (kWh) for long‑duration (four hours or more) projects outside China and the US. Ember says core battery equipment delivered from China is now about $75/kWh, with installation and grid connection typically adding roughly $50/kWh. Those component cost falls, combined with improved lifetimes, higher efficiencies and lower financing costs supported by clearer revenue models such as auctions, yield a levelised cost of storage (LCOS) of about $65/MWh under realistic project assumptions.

Kostantsa Rangelova, Global Electricity Analyst at Ember, said: “After a 40% fall in 2024 in battery equipment costs, it’s clear we’re on track for another major fall in 2025. The economics for batteries are unrecognisable, and the industry is only just getting to grips with this new paradigm.” Ember has also published a live calculator to let users vary assumptions and test LCOS outcomes.

The practical implication is straightforward: because most solar output is generated during daytime hours, only a portion needs to be shifted to meet evening and night demand. Ember models show that shifting half of daytime solar to the night would add about $33/MWh to the cost of electricity; combined with a 2024 global average solar price of $43/MWh, that produces dispatchable solar at roughly $76/MWh. The report frames this as a game‑changer for fast‑growing economies with strong solar resources.

Market developments and auction outcomes give empirical weight to Ember’s claims. In October 2025 Italy completed its first large‑scale battery auction, awarding 10 gigawatt‑hours (GWh) of capacity and securing developer interest well above supply. Reuters reporting on the tender noted an average contracted revenue significantly below the regulator’s cap and 15‑year fixed revenues intended to reduce investor risk, with awarded projects expected online by 2028. That auctionary clarity is the sort of revenue signal that, Ember argues, has helped reduce financing costs and compress LCOS.

Parallels in the United States point to rapid deployment and accelerating cost declines. Industry data shows US battery capacity surged from around 2,000 MW in 2020 to nearly 30,000 MW by April 2025, with states such as California and Texas using batteries to firm large solar fleets and supply a growing share of peak demand. Reuters analysis earlier in 2025 highlighted battery use meeting notable proportions of peak electricity and estimated annual cost declines of up to 40% since 2022, trends that align with Ember’s observation of steep recent price falls.

Notwithstanding the immediacy of current price falls, long‑standing technical projections produced by research bodies such as the US National Renewable Energy Laboratory (NREL) painted a more gradual descent. NREL’s previous modelling provided a range of 2025 cost scenarios for 4‑hour systems that are materially higher than present market observations: earlier reports included low‑end and mid‑range projections that reach into the hundreds of dollars per kWh. According to those studies, technological improvement and economies of scale were expected to push costs down over time, but the magnitude and pace of reduction identified by Ember appear to have outstripped many earlier forecasts. This divergence highlights how fast‑moving procurement, supply‑chain shifts and concentrated manufacturing in Asia are reshaping real‑world outcomes faster than some modelling anticipated.

Global renewable cost benchmarks reinforce the broader competitiveness story. A recent International Renewable Energy Agency (IRENA) report shows that the vast majority of new utility‑scale renewables commissioned in the prior year were cheaper than fossil‑fuel alternatives, and that battery costs have declined dramatically since 2010. IRENA cautioned, however, that geopolitical tensions, tariffs and raw material pressures could disrupt supply chains and slow cost declines, risks that market participants and policymakers must factor into planning.

For industrial decarbonisation and power system planning the implications are immediate. Industry data and auction outcomes indicate that batteries can now play a central role in turning variable solar into reliably timed, firm electricity at prices competitive with many alternatives. That alters capacity‑expansion choices: system planners can consider solar‑plus‑storage as a first‑order option for meeting evening peaks and capacity needs, rather than relying predominantly on new thermal generation or long lead‑time dispatchable resources.

But caveats remain. The economics Ember reports apply to markets outside China and the US and to four‑hour and longer utility projects; local costs will vary with grid connection complexity, permitting, local labour and financing conditions. Supply‑chain resilience, raw material availability and potential policy shifts, including the frequency and structure of auctions or capacity mechanisms, will continue to shape investment risk and capital costs. Moreover, earlier modelling bodies such as NREL remind the sector that forward projections are sensitive to assumptions about technology trajectories and deployment rates.

Policy choices will be critical to convert the present cost base into widescale deployment. Auctions and long‑term revenue contracts, as seen in Italy, can lower financing costs and accelerate build‑out. For industrial energy users and system operators, the new economics strengthen the business case for behind‑the‑meter and utility‑scale solar‑plus‑storage procurement as part of decarbonisation strategies. According to Ember’s analysis, the era when solar was “just cheap daytime electricity” is ending; dispatchable, low‑carbon power from solar plus batteries is emerging as an economically credible option for systems and industries seeking to decarbonise on a commercially sensible timetable.