According to Lazard’s annual benchmarking report, the levelised cost of storage (LCOS) of utility-scale battery energy storage systems (BESS) in the US has risen, reversing declines reported in the 2025 edition.
Investment banking group Lazard has produced 19 annual editions of its levelised cost of energy (LCOE) analysis, while its supplementary LCOS analysis is now in its 11th edition.
It said that the combination of import tariffs and new foreign entity of concern (FEOC) restrictions on the availability of the investment tax credit (ITC) for BESS projects using Chinese battery cells has curtailed access to low-cost cell supply that previously drove down costs.
In 2025, the LCOS of a 100MW, 4-hour-duration (400MWh) BESS ranged from US$115 to US$254/MWh without the ITC and from US$83 to US$192/MWh with the ITC.
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This year, a non-ITC project of the same output and capacity has an LCOS of between US$210 and US$292/MWh. A 100MW/400MWh project that avails of the ITC still has a lower LCOS, but it now ranges between US$148/MWh and US$209/MWh.
As detailed in this Energy-Storage.news webinar from a few days ago, sponsored by Intertek CEA, FEOC restrictions introduced with last year’s budget bill, HR 1, or the so-called ‘One, Big, Beautiful Bill Act’ (‘OBBBA’), limit the material assistance cost ratio (MACR) projects can receive from FEOC sources.
While that means there is no blanket ban on Chinese materials, equipment, or investment as such, the MACR threshold is such that battery cells, which comprise around half of a BESS project’s Capex, cannot come from Chinese sources, or the project will be ineligible for the ITC.
In last year’s edition, Lazard had found “notable declines” in the LCOS of utility-scale and commercial and industrial (C&I) BESS, driven by factors including the slowdown in US electric vehicle (EV) demand growth—which led to increased cell supply for stationary BESS applications—and technological advances in energy density and cell capacity increases. LCOS declines in 2025 had been enough to offset rises between 2021 and 2024, which occurred as the global COVID-19 pandemic rocked supply chains.
This had resulted in rising logistical costs and the cost of materials such as lithium carbonate, which the predominant lithium iron phosphate (LFP) BESS cell chemistries use a lot of. In 2024, an unsubsidised 100MW/400MWh BESS had an LCOS in the range of US$170/MWh to US$296/MWh according to Lazard’s 2024 report.
The full report details LCOS in US$/MWh and US$kWh/year terms, including systems in the residential, C&I and utility-scale market segments across a range of storage durations.
Speed-to-power an eminent concern
The new report came out yesterday, and as reported by our colleagues at PV Tech, it shows that utility-scale solar PV and onshore wind generation offer the cheapest LCOE in the US on an unsubsidised basis, in US$/MWh terms.
This is despite “rising and inflationary cost pressures across all generation technologies,” and a sharp increase in new-build gas generation even amid 15-year highs in the LCOE of gas.
“We’ve entered a speed-to-power era—demand is outpacing supply, costs are climbing across every technology, and value is shifting to whoever can deliver capacity the fastest,” Lazard managing director and head of renewables and sustainable infrastructure, Samuel Scroggins, said.
Scroggins added that while renewables are “the lowest-cost and quickest to deploy resource,” a diverse generation fleet will be required to “meet this moment.”
The Battery Asset Management USA and Solar & Storage Finance USA conferences are co-located this year and will take place 15-16 September 2026 at the Hyatt Regency Orange County in Garden Grove, California, US. They are hosted by our publisher Solar Media (part of the Informa Group).
