United States levelized cost of electricity (LCOE) 2021

The levelized cost of electricity (LCOE) for US renewables continues to plummet, widening its economic advantage over fossil-fired generation and strengthening the case for decarbonization of the US power grid. Near-term project economics remain exceptional given the impact of the Production Tax Credit (PTC) and Investment Tax Credit (ITC), though uncertainty regarding renewable energy-focused tax legislation and a commodity price surge is delaying new unit orders. Our base case includes a long-term phaseout of the PTC and ITC by 2035, reflecting the Biden administration's push to decarbonize the US power grid by 2035 within its USD 3.5 trillion spending plan. Once tax incentives sunset, unsubsidized utility-scale solar and onshore wind will have a 45% and 25% respective cost advantage over combined cycle natural gas turbines (CCGTs). Unsubsidized PV and battery energy storage is expected to reach parity with CCGT across the entire lower 48 by 2031.