Renewable Generation Cost Can Compete with Conventional Energy in the US

Renewables have achieved cost parity without subsidy in some locations


The Levelized Cost of Energy (LCOE) for onshore wind and utility-scale solar is now competitive with conventional generation technologies, even without subsidies in some locations, a report by Lazard, an asset management and financial advisory company, said.

It added that the cost of unsubsidized onshore wind can range from $24/MWh to $75/MWh, and the cost of utility-scale solar can range from $24/MWh to $96/MWh.

The cost of energy storage technologies is also declining rapidly, which is making it increasingly affordable to firm up the intermittency of renewable energy sources. It can help address the concerns about the variability of renewable sources and make integrating them into the grid easier.

While the reduction in costs continues, their rate of decline has slowed over the years.

The analysis also includes sensitivities for factors such as federal tax subsidies, fuel prices, carbon pricing, and cost of capital and shows how these factors can affect LCOE for different generation technologies.


Specifically, the LCOE for onshore wind ($24/MWh) and for utility-scale solar PV ($24/MWh) are lower in comparison to the marginal cost of coal-fired generation ranges from $29/MWh to $74/MWh, and the marginal cost of combined cycle gas-fired generation ranges from $51/MWh to $73/MWh.

According to Lazard’s analysis of unsubsidized LCOE, there have also been significant cost reductions in the historical pricing of utility-scale renewable energy generation technologies.

These cost reductions have been due to several factors, including lower capital costs, advancements in technology, and greater competition in the market.

The LCOE for renewable energy technologies, specifically utility-scale solar PV, recorded a decrease of 83% from $359/MWh in 2009 to $60/MWh in 2023. Onshore wind recorded a decrease of 63%, ranging from $135/MWh in 2009 to $50/MWh in 2033.

Both have decreased significantly over the past decade, making them increasingly cost-competitive with traditional fossil fuel technologies such as coal and natural gas combined cycle.

In contrast, the LCOE for coal and nuclear power has remained relatively stable.

The report also notes that the adoption of energy storage has been driven by regulatory incentives, falling costs, and the need to manage the variability of renewable generation.

Green hydrogen cost

The report notes that the cost of green hydrogen, which is produced using renewable energy sources such as wind and solar, is still relatively high compared to conventional fuels. However, the cost is expected to decline significantly over the next decade, driven by falling renewable energy costs, improvements in electrolysis technology, and economies of scale.

The report also highlights that the cost of blue hydrogen, which is produced using natural gas with carbon capture and storage, is already competitive with conventional fuels in some regions and  that blue hydrogen can play an important role in decarbonizing certain industries while green hydrogen scales up.

According to a Lawrence Berkely National Laboratory report, utility-scale solar projects’ LCOE decreased by about 85% in the U.S. since 2010 to $33/MWh in 2021.

The U.S. added 32 GW of renewable energy capacity in 2022, according to a BloombergNEF report.