Lazard Report: Wind and Solar Still Cheapest Power, But Costs Are Climbing for Everyone

Renewable energy is still the cheapest way to generate electricity in America. But it's getting less cheap, according to a new report from financial advisory firm Lazard covered by Utility Dive.

Utility-scale solar's levelized cost of electricity, or LCOE, runs between $40 and $98 per megawatt-hour. Onshore wind is close behind at $37 to $99. Combined cycle natural gas comes in at $51 to $129. Offshore wind is the outlier among renewables, running $105 to $167, still cheaper than nuclear's $175 to $255 range.

LCOE isn't the price you see on your electric bill. It's an estimate of what it costs to build and run a power plant over its lifetime, factoring in construction costs, fuel, and financing. It's the standard yardstick utilities and investors use to compare generation types head-to-head.

The Subsidy Question

Lazard's numbers show the production tax credit can push utility-scale solar's low end down to $16/MWh and offshore wind's low end to $77/MWh. That's a government subsidy doing real work to make renewables look cheaper than they'd otherwise be.

The One Big Beautiful Bill Act, signed into law and now in effect, moved up the phaseout deadline for wind and solar projects to qualify for the 48E investment tax credit and 45Y production tax credit. That's a direct policy choice to wind down federal support for renewables faster than under prior law.

Supporters of the phaseout argue it's simple fiscal discipline: wind and solar have had over a decade of subsidies, the technology is mature, and taxpayers shouldn't be propping up industries indefinitely. That's a fair point. Every generation technology, including nuclear and gas, has benefited from federal support at some point, and there's a legitimate argument for letting markets decide once technologies are established.

Critics counter that pulling the credit early, while gas and nuclear costs are also rising for unrelated reasons like tariffs and turbine shortages, doesn't actually make gas or nuclear more competitive on merit. It just makes renewables less competitive on paper. Both things can be true at once.

Gas Isn't Getting Cheaper Either

Despite renewables holding the price advantage, Lazard found utilities are announcing a wave of new gas-fired generation anyway. The report calls this out directly: gas LCOE is at a 15-year high, and lead times for building new gas plants are historically long, yet demand projections keep climbing and utilities keep placing orders.

Part of the reason is turbine costs. Wood Mackenzie projects the cost of gas turbines will hit $600 per kilowatt by the end of 2027, a 195% increase since 2019. High demand is outstripping supply, and prices are following.

Natural gas LCOE is also more exposed to fuel price swings than renewables. Lazard notes that renewable energy costs are driven almost entirely by upfront capital spending, while gas and other conventional plants carry ongoing fuel and variable costs that fluctuate with the market. A diverse generation mix, not an all-or-nothing bet on one technology, keeps showing up as the practical answer in the data.

Battery Storage Costs Reverse Course

The report also flagged a notable reversal: levelized cost of storage for utility-scale standalone battery systems rose this year after falling last year. Lazard attributes this to tariffs on lithium-ion battery imports, which have cut off access to lower-cost Chinese battery cells that had been driving costs down.

The One Big Beautiful Bill Act did preserve the investment tax credit for storage through 2033. But new Foreign Entity of Concern restrictions, aimed at limiting Chinese supply chain involvement in U.S. energy infrastructure, are adding cost pressure on the supply side even as the tax credit stays in place.

That's a real tension for policymakers: national security concerns about Chinese battery dominance are legitimate and bipartisan. Reducing dependence on a strategic rival for critical energy infrastructure is common sense. But it comes with a near-term price tag, and Lazard's numbers show that tag is real, not theoretical.

Lazard's report doesn't say how much further gas turbine costs will climb after 2027, or whether battery cell manufacturing will scale up domestically fast enough to offset the loss of Chinese supply. It also doesn't project how the accelerated tax credit phaseout will actually reshape the pipeline of new wind and solar projects over the next several years, since those effects will take time to show up in the build data. Utilities, regulators, and ratepayers are all watching the same numbers and drawing different conclusions about what to build next.