Clean power economics are sending mixed signals, with battery storage costs plummeting even as the price of other renewable technologies rises, according to a new report from BloombergNEF (BNEF). The report, Levelized Cost of Electricity 2026, highlights a divergence in the clean energy landscape, driven by supply chain issues, resource availability, and market dynamics, particularly in China.
The benchmark cost for a four-hour battery project fell 27% year-on-year in , reaching a record low of $78 per megawatt-hour (MWh). This decline is attributed to lower pack prices, increased competition among manufacturers, and improvements in system design. The falling costs are accelerating the deployment of co-located renewable projects; developers added 87 gigawatts of combined solar and storage capacity in , delivering power at an average of $57/MWh.
However, the cost of solar, onshore wind, and offshore wind all increased in , reversing a recent downward trend. BNEF cites supply chain constraints, poorer resource availability, and market reforms in mainland China as key factors. The benchmark cost of a typical fixed axis solar farm rose 6% to $39/MWh, while onshore wind reached $40/MWh and offshore wind climbed to $100/MWh globally.
Despite these broader cost increases, BNEF anticipates continued innovation and competition will drive down clean energy technology costs over the long term. The firm forecasts LCOE reductions of 30% in solar, 25% in battery storage, 23% in onshore wind, and 20% in offshore wind by .
“Cheaper costs due to manufacturing overcapacity from the electric vehicle market and better system designs are transforming the economics for large energy storage projects,” said Amar Vasdev, lead author of the report and senior energy economics associate at BNEF. “The levelized cost of electricity for a four-hour system is now below $100/MWh in six markets. As costs continue to drop, we expect battery storage to strengthen solar project revenues, support broader renewable deployment and accelerate the shift toward storage-led system balancing over fossil-fuel-based peaking capacity.”
The cost increases aren’t limited to renewables. Thermal power generation also saw price hikes in . New-build gas and coal plants experienced rising equipment prices, pushing the global levelized cost of electricity for combined-cycle gas turbines (CCGTs) up 16% to $102/MWh – the highest level on record. Increased demand from data center development is contributing to elevated gas turbine prices, and BNEF expects these costs to remain high for the foreseeable future.
Regional variations in wind project costs are also apparent. Mainland China continues to benefit from a cost advantage, while onshore wind projects outside of China saw a 4% cost decline in . However, the global benchmark rose by 2%, influenced by recent Chinese projects built in areas with lower wind speeds. Offshore wind supply chain tightness pushed costs higher in most major markets, with a 12% global increase. In the UK, recently financed offshore wind projects are now 69% more expensive than they were five years ago, and BNEF anticipates costs will remain elevated until at least .
Interestingly, wind power has regained its position as the cheapest option for new electricity generation in the US, surpassing gas-fired power for the first time since . This shift is largely due to a doubling of US gas turbine capital expenditure in just two years, driven by the surge in data center construction. Combined-cycle gas turbine costs have reached record levels, significantly exceeding global averages.
These challenges in gas turbine supply chains and grid connections may create opportunities for quicker-to-deploy clean power technologies. Co-located solar and four-hour battery systems can now compete with gas in meeting data center electricity demand, particularly in regions like California and parts of Texas, as solar output expands and storage prices fall. “We are in the middle of a race for electrons to meet power demand growth from electrification and data centers,” Vasdev noted. “Renewables are already outcompeting the operating costs of existing fossil-fuel plants in key markets, and not just for new-build projects.”
BNEF’s Levelized Cost of Electricity report, now in its 17th year, is considered an industry benchmark. The edition is based on cost data from over 800 recently financed projects and models LCOE forecasts across 28 technologies in more than 50 markets. This year’s report includes expanded coverage of the Middle East and Africa, deeper analysis of battery storage economics, and a comprehensive data update across all technology classes.
Deloitte’s analysis suggests that annual additions of solar, wind, and storage between and could fall to a range of 30 GW to 66 GW. The firm highlights the growing role of battery storage in serving surging data center demand, alongside the expansion of firm baseload renewables like hydro and geothermal.
The market for hybrid solar and wind projects is also projected to grow, reaching USD 2.3 billion by , driven by renewable energy integration and grid modernization efforts. These trends underscore the evolving dynamics of the clean energy transition, where cost competitiveness and technological advancements are reshaping the power generation landscape.
