Wind, solar and storage remain cheapest new-build generation, says Lazard, despite rising costs

A new analysis published this week by US financial services giant Lazard confirms that unsubsidised renewable energy remains the most cost-competitive form of new-build generation in the United States, despite rising cost pressures affecting all energy generation technologies.

Lazard published the 19^th edition of its Levelized Cost of Energy+ (LCOE+) report this week, one of the leading benchmarks in the United States for the cost competitiveness of energy generation technologies.

The latest edition of the report comes as the energy sector encounters a pivotal moment, with unprecedented power demand growth, increasing new-build costs across all technologies, as well as intensifying focus on reliability and affordability.

Despite these pressures, Lazard found that renewables remain the most cost-competitive form of new-build generation on an unsubsidised basis and, therefore, will continue to account for the majority of near-term capacity additions in the United States.

Wind, solar, and storage are expected to continue accounting for the majority of near-term US capacity additions due in large part to their relatively short deployment timeline.

And even though Lazard’s latest analysis shows the levelized cost of energy (LCoE) continues to rise, these technologies nevertheless are cheaper than conventional new-build alternatives including gas, coal, and nuclear.

According to Lazard’s analysis of LCoE (all figures in $US), which is based on Lazard estimates and publicly available information of the average production cost of a unit of electricity over the lifetime of a power plant, onshore wind was the cheapest new-build option with a LCoE of $37-$99.

This is slightly ahead of utility-scale solar at $40-$98 and the combination of onshore wind and storage at $49-$140.

Conversely, the only comparable fossil-fuel based technology was combined-cycle natural gas plants, which boasts an LCoE of $51-$129. New-build coal generation sits at $72-$177, while the LCoE for both gas peaking and nuclear plants were the two most expensive new-build options.

Importantly, the cheapest new-build onshore wind and utility-scale solar plants are comparable with the average marginal cost of operating existing combined-cycle gas and coal plants, which are referred to in the graph above as the ‘marginal cost midpoint’ of $42 and $51, respectively.

What the graph above does not show, however, is the fact that the marginal cost of existing renewable generation is near-zero.

Lazard also pointed to “continued upward revisions to demand projections” as the driving force behind a “sharp increase” in announced new-build gas generation, despite a 15-year high LCoE – one which is also only expected to continue to rise alongside historically long development and equipment delivery timelines.  

While the boom in data centres is a major cause, so too is the Trump administration’s efforts to prevent and roll-back new renewable projects in favour of conventional technologies, specifically those utilising natural gas.

For example, in every instance yet recorded of the Trump administration successfully persuading energy companies to abandon previously approved offshore wind projects, the “refunded” investment has been immediately announced as being redirected towards new gas-based generation projects.

Lazard’s analysis also found that the costs for standalone storage have begun increasing, reversing declines seen in previous years.

The LCoE for a 100-megawatt (MW) 2-hour, or 200 megawatt-hour (MWh) storage system is $215-$414, or $152-$282 with the US federal Investment Tax Credit (ITC). This is up from $129-277 and $95-$209 in 2025.

Driving the increase in storage costs is the effects of tariffs on lithium-ion battery imports which has curtailed access to low-cost Chinese cell supply that was responsible for driving lower costs.

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