Solar costs are climbing for the first time in years

KEY DEVELOPMENTS

• Lazard Reports First Solar Cost Increase in Years: Utility-scale solar LCOE rose to $40–$98/MWh in the firm's , up from $38–$78/MWh in 2025. Solar-plus-storage now ranges $61–$156/MWh. Solar still ranks among the cheapest generation sources, but the upward trend reinforces warnings that PPA prices could jump 40–120% as IRA support erodes. Read More: 2026 report.
• Qcells Ships Equipment for 372 MW Arizona Solar Park: The South Korean manufacturer began delivering panels and storage components for the Atlas V (237 MWdc) and Atlas VI (135 MWdc) projects in 's La Paz County, part of the larger. Read More: Arizona, Atlas Energy Park.
• Avantus Closes $525M California Solar-Storage Deal: The developer locked in financing for its 184 MW Aratina 2 solar-plus-storage project in Southern , a deal first reported last week that signals for utility-scale renewables even as costs rise. Read More: California, sustained lender appetite.
• Colorado Voters Face 'Right to Natural Gas' Amendment: A ballot measure headed to voters would constitutionally protect fossil fuel companies' right to sell gas and could , directly threatening the state's clean energy transition strategy. Read More: Colorado, restrict building electrification codes.
• CMBlu Pushes US Organic Flow Battery Manufacturing: The German storage company is advancing plans to build organic flow battery production capacity in the United States, targeting grid-scale and commercial market segments as demand grows alongside data center load. Read More: long-duration energy storage.

Solar & Storage

The numbers in Lazard's annual LCOE analysis are the kind developers and investors check the way traders check oil futures. This year's headline finding — utility-scale solar costs moving up, not down — breaks a long run of steady declines that had become an article of faith in project finance. The culprits are familiar: tariffs on imported panels, elevated interest rates that increase the cost of capital, and supply chain disruptions that have pushed module and balance-of-system prices higher. According to , the low end of the solar LCOE range barely moved — $40/MWh versus $38/MWh a year ago — but the high end jumped from $78 to $98/MWh, a 26% increase that reflects the wide spread between projects with locked-in equipment costs and those still negotiating procurement. Read More: Lazard's report.

For anyone structuring a PPA right now, that spread matters enormously. Last week's industry analysis warning that PPA prices could surge 40–120% as IRA incentives face political uncertainty under the Trump administration now has fresh data behind it. Solar-plus-storage, increasingly the default configuration for new utility-scale projects, ranges $61–$156/MWh in Lazard's latest numbers. That upper bound makes some projects uncompetitive against natural gas combined-cycle plants, which Lazard still prices in a comparable corridor. The saving grace: solar at the low end of the range remains cheaper than virtually every alternative.

Against that backdrop, two major projects moving forward this week offer a counterpoint to the cost pessimism. In , Qcells has begun equipment deliveries for the Atlas V and Atlas VI solar-plus-storage installations totaling 372 MWdc in La Paz County. These are part of the broader Atlas Energy Park, one of the larger solar complexes under construction in the desert Southwest. Equipment delivery is the stage where tariff exposure bites hardest, and the fact that Qcells — which manufactures modules domestically at its Dalton, Georgia, factory — is handling supply suggests at least partial insulation from import duties. Read More: Arizona.

In Southern California, Avantus closed $525 million in construction financing for its 184 MW Aratina 2 solar-plus-storage project. That dollar-per-watt ratio — roughly $2.85/Wdc — sits at the upper range of recent utility-scale deals and likely reflects the higher capital costs Lazard flagged. Still, the sheer size of the financing package shows that lenders remain willing to underwrite large solar-storage assets in strong markets. For developers weighing whether to advance or shelve projects in the current rate environment, the Avantus deal sends a useful signal: capital is available, but it's more expensive.

Separately, that Vesper Energy broke ground on a new solar project in Texas, Nexamp and TurningPoint are converting former coal land to solar farms, and Avangrid announced installations along the Oregon Trail corridor. The coal-to-solar conversions are worth watching: brownfield sites with existing grid connections and cleared land can shave months off development timelines, a real advantage when interconnection queues stretch years. Read More: Renewable Energy World reported.

Battery Storage

CMBlu Energy, a German firm specializing in organic flow batteries, is pushing ahead with plans to manufacture its technology in the United States. In an , the company's U.S. president outlined targets spanning utility-scale, commercial, and industrial market segments. Organic flow batteries use carbon-based molecules rather than vanadium or lithium, which could reduce dependence on imported critical minerals — a priority the Trump administration has emphasized in its energy security directives. Read More: interview with Energy Storage News.

The timing matters. Last week, Frontier Power USA selected sites for 920 MWh of zinc-based batteries, and Peak Energy announced the first U.S. sodium-ion battery gigafactory in Sacramento. The long-duration storage market is fragmenting across chemistries, and whoever can manufacture at scale domestically stands to benefit from both IRA manufacturing credits — while they last — and from growing demand driven by data centers and grid reliability mandates. CMBlu has not disclosed a specific factory location or capacity target, details that will determine whether the plan is serious or aspirational.

Meanwhile, a small but telling story out of New York: by shifting air conditioning load off the grid during peak hours. It's a modest application compared to 200 MWh grid-scale installations, but it demonstrates distributed storage's practical value in a city where summer peak demand regularly strains aging infrastructure. Read More: plug-in battery systems helped NYC renters ride out a record heat wave.

Policy & Markets

Colorado's ballot fight over a proposed "right to natural gas" constitutional amendment deserves close attention from anyone with clean energy assets in the state. The measure would enshrine fossil fuel companies' right to sell natural gas and could preempt local building codes that promote electrification — the kind of all-electric building mandates that cities like Denver have adopted. If voters approve it, the amendment would be extremely difficult to reverse and could freeze heat pump adoption and building decarbonization programs statewide. For developers banking on load growth from electrification, the amendment represents a direct threat to demand forecasts. Read More: reported by Inside Climate News.

On Capitol Hill, that energy permitting reform remains on Congress's pre-August wish list, alongside must-pass spending bills and the farm bill. "Wish list" is the operative phrase — permitting legislation has been perpetually six months away for years now, and the current Congress has shown no greater urgency than its predecessors. Developers waiting for faster NEPA reviews or transmission permitting streamlining should plan as if existing timelines will hold through 2027. Read More: Punchbowl News reports.

In , Governor Josh Shapiro signed a that includes new energy policy provisions alongside education and pension funding. Details on the energy components remain sparse, but any state-level spending commitments or regulatory frameworks embedded in the budget could affect project development in a state that sits at the crossroads of PJM's interconnection backlog. Progressive House Democrats, meanwhile, are talking about updating the Green New Deal framework for the AI era, per — a messaging exercise that won't produce legislation under the current administration but signals where the Democratic caucus may steer energy policy if it regains power. Read More: Pennsylvania, $50.8 billion compromise budget, Politico.

LOOKING AHEAD

• Congressional Recess Clock: Both chambers face a shrinking window before August recess to advance energy permitting legislation; expect a flurry of amendment drafts and horse-trading on transmission siting provisions in the coming two weeks.
• Colorado Ballot Campaign Ramps Up: The natural gas constitutional amendment will draw organized opposition from clean energy trade groups and electrification advocates; early polling and campaign spending filings in the next 30 days will signal how competitive the fight becomes.
• Lazard Fallout in PPA Markets: The LCOE increase will factor into Q3 PPA negotiations across ERCOT, CAISO, and PJM; watch for utility RFP results and contracted prices to reflect the higher cost benchmarks in deals closing this quarter.

THE BOTTOM LINE: Solar is still cheap, but it's no longer getting cheaper — and the rising cost curve, driven by tariffs and interest rates, is colliding with political uncertainty over IRA incentives to create the tightest project economics the industry has faced since the early 2020s.