Summary
This paper analyses the current cost of providing fully dispatchable grid-scale solar energy, combining both solar photo voltaic (PV) generation and battery energy storage systems (BESS). The stand out figure is that in China the cost of fully dispatchable grid-scale solar (FDGSS) energy has fallen to less than US 3.3c per KWh. This is now fully competitive with coal fired electricity generation. The highest priced (FDGSS) energy is in Australia where it can cost up to US 15.4C per KWh.
It provides a detailed breakdown of the average capital costs for utility-scale solar PV and BESS across key global regions, including China, the Gulf States, USA, South America, South Asia, Indo-China, and Australia.
The analysis highlights the significant regional variations in costs, with China consistently serving as the global benchmark for low-cost solar and storage solutions.
Ultimately, the paper derives the estimated total capital cost and the resulting feed-in cost per MWh for a 1 MW fully dispatchable 24x7 solar power system, based on specific operational assumptions, offering a comprehensive economic overview of continuous solar power.
Introduction
The global transition towards sustainable energy sources necessitates a clear understanding of the economics of renewable power generation, particularly solar energy. While the capital costs of solar photovoltaic (PV) installations have experienced remarkable declines in recent years, the inherent intermittency of solar power presents challenges for grid stability and continuous supply. To address this, the integration of utility-scale battery energy storage systems (BESS) is crucial for achieving fully dispatchable, 24x7 solar power.
This paper provides a detailed analysis of the current capital costs for grid-scale solar energy, encompassing both solar PV projects and associated energy storage solutions. We will present up-to-date regional cost data from key global markets, including China, the Gulf States, USA, South America, South Asia, Indo-China, and Australia. The ultimate objective is to synthesize this data to derive the total capital cost and an estimated feed-in cost per MWh for a 1 MW fully dispatchable solar power system, thereby offering a comprehensive economic perspective on reliable, continuous solar energy.
The average capital costs per megawatt (MW) for utility-scale solar in key regions
The current average capital cost per megawatt (MW) for utility-scale solar in China has dropped sharply in recent years, primarily due to falling module prices and supply chain efficiencies.
In 2024, module prices in China fell to CNY 0.70 per watt (about $0.10 per watt), down from CNY 2.00 per watt in 2020. This price collapse led to a 40–50% reduction in total installation costs for utility-scale solar projects1.
As of early 2025, industry sources and market data indicate that the average capital cost for new utility-scale solar PV in China is approximately $500,000–$600,000 per MW (or $0.50–$0.60 per watt)23.
This is significantly lower than in most other major solar markets, reflecting China’s manufacturing dominance and intense domestic competition45.
Key cost drivers:
Module oversupply and aggressive price competition have pushed prices to or below production cost67.
Large-scale projects benefit from economies of scale and lower labor and land costs, especially in northwestern provinces where most utility-scale solar is built89.
Based on the most recent data for 2025, here are the average capital costs per megawatt (MW) for utility-scale solar in key regions including China, the Gulf states, USA, South America, South Asia, Indo-China and Australia.
| Region | Average Capital Cost per MW (USD) | Notes/Source Details |
|---|---|---|
| China | $500,000–$600,000 | The lowest globally due to intense competition and manufacturing overcapacity1011. |
| Gulf States (e.g., Saudi Arabia, UAE) | $650,000–$800,000 | Saudi Arabia’s utility-scale PV capex is about 5% higher than China’s, reflecting a range of $650k–$800k/MW12. The UAE and Saudi Arabia have achieved some of the world’s lowest solar tariffs, enabled by large-scale projects and competitive auctions1314. |
| USA | $990,000–$1,060,000 | Average cost for large-scale solar farms is $0.99–$1.06 per watt, or $990k–$1.06M per MW, as of mid-202515. |
| South America (e.g., Chile, Brazil, Argentina) | $700,000–$900,000 | Chile and other leading markets in Latin America have capex typically in the $0.70–$0.90 per watt range for utility-scale projects, translating to $700k–$900k per MW1617. |
| South Asia (e.g., India) | $600,000–$750,000 | India’s costs have fallen rapidly, with recent auctions and industry data indicating $0.60–$0.75 per watt for new utility-scale projects18. |
| Indo-China & Southeast Asia (e.g., Vietnam, Thailand) | $800,000–$1,100,000 | Southeast Asia sees more variation: Vietnam’s recent projects average $0.80–$1.10 per watt, or $800k–$1.1M per MW, depending on location, grid access, and project size1920. |
| Australia | $900,000–$1,200,000 | Australia’s costs are higher due to labor, land, and permitting expenses, with recent projects typically in the $0.90–$1.20 per watt range21 (industry standard). |
Key observations:
China remains the global benchmark for low-cost solar, with capital costs of $500,000–$600,000 per MW.
Gulf States and India are close behind, benefiting from competitive auctions, favorable solar resources, and large-scale project development.
USA, Australia, and Southeast Asia have higher costs due to local factors such as labor, permitting, and grid connection.
South America (notably Chile and Brazil) is competitive, but costs can vary with project scale and location.
All figures are for turnkey EPC (engineering, procurement, and construction) costs for utility-scale, grid-connected solar PV projects, and exclude storage unless specified.
Capital cost of grid scale energy storage
Here are the typical capital costs for grid-scale battery energy storage systems (BESS) in 2025 in China the Gulf states, USA, South America, South Asia, Indo-China and Australia, based on the latest available data:
| Region | Typical Capital Cost per kWh (USD) | Typical Capital Cost per MW (USD, 4-hour system) | Notes |
|---|---|---|---|
| China | $51–$59 per kWh | $204,000–$236,000 per MW | Based on 4-hour lithium iron phosphate (LFP) battery auctions in 202522. |
| Gulf States (e.g. Saudi Arabia, UAE) | <$200 per kWh | <$800,000 per MW | Saudi Arabia and UAE benefit from cheap Chinese batteries; costs are 30–70% lower than US/Europe2324. |
| USA | $115–$254 per MWh (i.e., $115–$254 per kWh for 4-hour systems) | $460,000 – $1,016,000 per MW | Lazard’s 2025 analysis for 100MW, 4-hour utility-scale standalone BESS25. Incentives (ITC) can reduce costs further. |
| South America | ~$200–$300 per kWh | ~$800,000 – $1,200,000 per MW | Follows global trends, but costs are typically higher than in China/Gulf due to logistics and finance. |
| South Asia (e.g. India) | ~$150–$250 per kWh | ~$600,000 – $1,000,000 per MW | Costs are falling rapidly, approaching Gulf levels for large projects. |
| Indo-China & SE Asia | ~$150–$250 per kWh | ~$600,000–$1,000,000 per MW | Vietnam, Thailand, etc. see costs similar to South Asia, with some local variation. |
| Australia | $200–$300 per kWh | $800,000–$1,200,000 per MW | Higher labor and grid costs, but falling due to Chinese imports and local competition. |
Key details:
China leads the world in low-cost grid-scale storage, with recent auctions clearing at $51–$59/kWh for 4-hour LFP battery systems—about $204,000–$236,000 per MW installed for a 4-hour system26.
Gulf States are leveraging cheap Chinese batteries, with installed costs under $200/kWh (<$800,000/MW for 4 hours), far below US/European levels2728.
USA costs are higher, typically $115–$254/kWh for 4-hour systems ($460,000–$1,016,000 per MW), but incentives like the ITC can lower these figures29.
South America, South Asia, Indo-China, and Australia see costs between $150–$300/kWh ($600,000–$1,200,000 per MW for 4-hour systems), with the lower end approaching Gulf/China levels for large projects, especially where Chinese suppliers dominate.
Note:
These figures are for turnkey EPC costs (engineering, procurement, and construction) of utility-scale battery storage, typically for 4-hour lithium-ion (LFP) systems, which are now industry standard.
Actual costs may vary by project size, grid connection, local labor, and permitting.
The average capital cost of a 1 MW fully dispatchable 24 x 7 solar power system
Using the figures from above, we can derive the capital cost of a MW capacity fully dispatchable 24 x 7 solar power system. Using the capital cost we can also calculate an estimated feed in cost of a MWh of electricity.
These calculations are based on the assumption that the solar farm will be delivering electricity for 5 hours out of the 24 hour day. This implies that stored energy from batteries will be required for the remaining 19 hours, and so 19 MWh of battery storage will be required. Charging the batteries implies the need for 4 MW of installed capacity in addition to the 1 MW needed for supply to the grid during the daily operating window of the solar farm. This implies that a solar installation that can deliver 1MW continuously 24 x 7 requires 5 MW of installed capacity and 19 MWh of battery storage.
| Region | Typical Capital Cost for 5 MW PV Low (USD M) | Typical Capital Cost for 5 MW PV High (USD M) | Typical Capital Cost for 19 MWh storage Low (USD M) | Typical Capital Cost for 19 MWh storage High (USD M) | Total CAPEX Low (USD M) | Total CAPEX High (USD M) | Cost per MWh Low (USD) | Cost per MWh High (USD) |
|---|---|---|---|---|---|---|---|---|
| China | $2.50 | $3.00 | $1.00 | $1.10 | $2.50 | $4.10 | $32.82 | $53.82 |
| Gulf States (e.g. Saudi Arabia, UAE) | $3.30 | $4.00 | $3.80 | $3.80 | $6.10 | $7.80 | $80.08 | $102.40 |
| USA | $5.00 | $5.30 | $2.20 | $4.80 | $7.20 | $10.10 | $94.52 | $132.59 |
| South America | $3.50 | $4.50 | $3.50 | $5.70 | $7.00 | $10.20 | $91.89 | $133.90 |
| South Asia (e.g. India) | $3.00 | $3.80 | $2.90 | $4.80 | $5.90 | $8.60 | $77.45 | $112.90 |
| Indo-China & SE Asia | $4.00 | $5.50 | $2.90 | $4.80 | $6.90 | $10.30 | $90.58 | $135.22 |
| Australia | $4.50 | $6.00 | $3.80 | $5.70 | $8.30 | $11.70 | $108.96 | $153.60 |
Cost per MWh assumptions
8760 hours pa (HPA)
Interest rate is 2.5% flat rate (IR)
Loan Repayment period is 20 years => 5% pa repayment (LR)
2% pa new equipment installation (to maintain capacity due to battery and solar panel degradation of 2% pa) (DEG)
2% operating overhead - OPEX
Cost per MWh := CAPEX * (IR + LR + DEG + OPEX) / HPA
Conclusion
This paper has provided a comprehensive analysis of the capital costs associated with developing grid-scale solar energy, focusing on both solar photovoltaic (PV) installations and the essential integration of battery energy storage systems (BESS) for fully dispatchable 24x7 power. The regional data clearly illustrates China's preeminent position as the global benchmark for low-cost solar PV and battery storage solutions, a result of its manufacturing dominance and intense market competition. Other regions, notably the Gulf States and India, also demonstrate highly competitive pricing, often benefiting from direct or indirect access to Chinese supply chains, while the USA, Australia, and parts of Southeast Asia exhibit higher costs due to local market dynamics, labor, and permitting complexities.
The detailed calculation for a 1 MW fully dispatchable system, requiring a significant overbuild of solar PV capacity and substantial battery storage, underscores the investment needed to transform intermittent solar into a continuous power source. The estimated feed-in costs per MWh derived from these capital outlays provide a critical economic perspective on the viability of continuous solar power across diverse geographical contexts.
In conclusion, while the total capital expenditure and resulting energy costs vary significantly by region, the overall trend points towards increasingly competitive dispatchable solar energy, particularly as storage costs continue to fall. The findings highlight the critical role of cost-effective energy storage in enabling solar to serve as a reliable, baseload-capable component of future energy grids, reinforcing its potential as a cornerstone of the global energy transition.