Solar Emerges as the Most Cost-Effective Electricity Source, 29% Lower Than Fossil Fuels

A recent report from Ernst & Young highlights that solar power continues to maintain its status as the most economical source for new-build electricity, even in the face of inflationary pressures. Despite rising costs, solar's levelized cost of electricity (LCOE) globally is 29% lower than the most affordable fossil fuel alternative, as revealed in Ernst & Young's energy and resources report.

In 2022, an impressive 86%—equivalent to 187 GW—of newly commissioned renewable energy resources generated electricity at a lower cost than the average fossil fuel generation. The report emphasizes that solar consistently ranks as the most cost-effective new-build electricity option in various markets.

Ernst & Young notes that solar's LCOE has experienced a remarkable decrease globally, plummeting from over $400/MWh in the early 2010s to approximately $49/MWh in 2022, reflecting an 88% reduction. During the same period, the LCOE for wind power also saw a substantial decline of around 60%.

The report forecasts a paradigm shift where solar and wind will become the primary global baseload electricity sources. By 2030, these traditional renewables are anticipated to constitute 38% of the energy mix, and by 2050, solar and wind may contribute 62% of the global energy mix. Ernst & Young identifies China, Europe, and the U.S. as key drivers, projecting a 53% increase in solar and wind generation, accounting for over 57% of the global output by 2050.

Ernst & Young predicts a global solar boom, with solar power becoming the predominant energy source in countries like the U.S., Oceania, and South Asia. This shift is attributed to advancements in solar PV module technologies.

However, the report acknowledges significant barriers to achieving these milestones. In the U.S., a backlog of grid interconnection applications is causing delays, cancellations, and substantial costs. Ernst & Young reveals that the U.S. currently has at least 1,350 GW of wind and solar capacity, along with 680 GW of storage awaiting connection—enough to double the country's electricity supply.

Ernst & Young's survey of over 70,000 global consumers indicates strong sentiment toward residential solar adoption. Approximately 62% of respondents have bought or are considering purchasing solar panels, while 50% are contemplating or have already invested in battery storage, showcasing positive consumer attitudes towards solar and related technologies. For more insights on consumer confidence trends, including attitudes toward solar, home electrification, and electric vehicles, refer to