Wood Mackenzie records solar LCOE of $37/MWh in MENA region
Wood Mackenzie researchers say single-axis PV offers the lowest utility-scale generation costs globally, with efficiency gains and stable supply chains expected to drive down solar’s levelized cost of electricity (LCOE).
October 24, 2025 Patrick Jowett
Image: Wood Mackenzie
Share
    
Solar energy will maintain its position as the world’s most cost-competitive power generation source through 2025, according to analysis by Wood Mackenzie.
The consultancy’s latest work reviews the LCOE for renewables in Europe, North America, Latin America, the Asia Pacific and the Middle East and Africa (MENA).
It found single-axis tracker systems in the MENA region to be the most cost-competitive power generation source at $37/MWh. Wood Mackenzie said utility-scale solar is maintaining its position as the MENA region’s price setter, with single-axis tracker technology consistently outperforming onshore wind. By 2060, single-axis tracker PV costs are projected to converge at approximately $17/MWh.
The analysts added that tracker and fixed-tilt PV technologies will remain more cost-effective than onshore wind throughout the outlook period in the MENA region. Meanwhile, costs of utility-scale battery storage are expected to see a notable drop, with average turnkey prices in Saudi Arabia and the UAE expected to decline by 7% to 9% by 2034.
In Europe, the LCOE of renewables fell by 7% in 2025 as capital costs dropped 8% versus the 2020 to 2024 average. Utility-scale solar PV with single-axis tracking currently offers Europe's lowest average LCOE, Wood Mackenzie said, with declining module prices contributing to 10% of the cost reductions against 2024.
Wood Mackenzie said the LCOE of commercial distributed PV in Europe could decline 49% by 2060 compared to current levels. Meanwhile, utility-scale, four-hour battery storage costs are expected to fall below $100/MWh by 2026, before declining another 35% by 2060.
Commercial solar currently enjoys the lowest average LCOE across Latin America, with single-axis PV delivering the most competitive utility-scale generation costs in 2025. The lowest prices are found in the region’s more mature markets, including Brazil, Chile and Mexico. Across Latin America, storage LCOE is currently forecast to decrease by 24% by 2060, according to Wood Mackenzie’s predictions.
In the Asia Pacific, utility-scale solar delivers the lowest generation costs region-wide, with its LCOE spanning $27/MWh in China to $118/MWh in Japan. China also currently achieves the world's lowest storage LCOE, which Wood Mackenzie attributed to intense supplier competition.
The analysts also said that while new US tariffs have increased short-term solar capital costs in the United States, advancing solar module, inverter and tracker technologies will drive long-term price reductions.
Amhed Jameel Abdullah, senior research analyst at Wood Mackenzie, added that technological improvements, supply chain optimization and economies of scale will help bring continued cost reductions to renewables, helping to reinforce their position as the dominant power generation technology globally.
“Our LCOE 2025 analysis reveals that solar PV and onshore wind have become the dominant low-cost options worldwide, whilst hybrid systems and battery storage are rapidly closing the competitiveness gap” Abdullah concluded
pv-magazine.com |
