Lazard: Renewables Still Cheapest as All LCOEs Rise
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- Lazard's 2026 LCOE+ report found unsubsidized renewables remain the most cost-competitive form of new-build generation despite rising LCOE across all generation types, driven by higher capital costs, sustained interest rates, tariff pass-through, and supply chain repricing.
- Utility-scale solar LCOE ranges from $40 to $98 per MWh and onshore wind from $37 to $99/MWh, compared with combined cycle gas at $51-$129/MWh and nuclear at $175-$255/MWh; the production tax credit could push solar's low end to $16/MWh and offshore wind's to $77/MWh.
- Offshore wind carries the highest renewable LCOE at $105-$167/MWh, still below peaking gas at $144-$276/MWh, though Lazard noted the One Big Beautiful Bill Act created an earlier phaseout deadline for wind and solar projects qualifying for the 48E investment tax credit and 45Y production tax credit.
- New-build gas generation announcements have surged to a 15-year high LCOE due to continuous upward demand revisions, with gas turbine costs projected to reach $600/kW by end of 2027 — a 195% increase since 2019, per Wood Mackenzie.
- Utility-scale standalone storage LCOS increased, reversing last year's declines, as tariffs on lithium-ion battery imports curtailed access to low-cost Chinese cell supply, while Foreign Entity of Concern restrictions under the One Big Beautiful Bill Act accelerated diversification toward Southeast Asian and domestic manufacturing.
- Existing renewable generation has a near-zero marginal cost, and Lazard said this gap between marginal cost and new-build LCOE underscores the near-term economic case for optimizing existing assets while new-build costs across all technologies face sustained pressure.
Why it matters: The renewable cost advantage is intact but compressing: solar and wind high-end LCOEs are rising faster than low-end LCOEs, meaning developers who can manage supply chain and project-level economics will set the market floor. Meanwhile, gas turbine costs have nearly tripled since 2019 and the One Big Beautiful Bill Act accelerated wind/solar tax credit phaseouts — so the cheapest option on paper is also facing new policy and trade headwinds.
