Renewables, Hit by Inflation, Still Most Competitive

April 14, 2023

Above, new Lazard Levelized Cost of Energy numbers. Gray bars indicate lack of data, for instance, for new Geo-thermal and nuclear. Nuclear costs based on cost estimates for Vogtle power plant in Georgia, the only available US example.


The latest levellised cost of energy assessment has been released by global investment bank Lazard, confirming – as CSIRO and the market operator have done in Australia – that wind and solar, even “firmed” by battery storage, still beat the fossil fuel competition.

In fact, the Lazard assessment shows that on pretty much any assessment – cost of energy, cost of energy and firming, marginal cost of energy, and cost of capital – wind and solar win easily. And that’s without counting the carbon cost of their competitors, and the impact of the Joe Biden’s Inflation Reduction Act.

“The central findings show, among other things, that even in the face of inflation and supply chain challenges the LCOE (levellised cost of energy) of best-in-class renewables continues to decline,” Lazard notes.

It also says the IRA will have a dramatic impact on the market and will boost more investment in renewables, that storage will grow in scope and importance, and that even hydrogen could play a significant role.

It has no doubt where this will lead: The continued retirement of conventional generation “at pace” – an assessment that is supported by the US Energy Information Administration which predicts


The average costs to produce onshore wind and solar power in the United States have increased for the first time since 2009 as steel and silicon became more expensive and supply chains were disrupted, research from investment bank Lazard showed on Wednesday.

President Joe Biden is among world leaders who hope that peppering hillsides and plains with turbines and panels will reduce the cost of power for all consumers in part because wind and light do not need to be paid for, unlike gas and coal.

The levelized cost of energy – a measure of how much a developer needs to charge for power when factoring in expenses like building and maintenance – has been decreasing for the past 15 years, according to Lazard.

Now, cost inflation and supply chain disruption have helped push the unsubsidized cost of producing large-scale solar power as high as $96 per megawatt hour, from a maximum of $41 in 2021, the bank found. The average has gone to $60 from $36.

But the low point of the new range is also much lower: Lazard found some companies could charge as little as $24 per megawatt hour for utility-scale solar and still cover their costs, from $30 in 2021.

“The cost of everything has gone up because of inflation and supply chain issues but for us what is more striking is that the bottom end of the cost has gone down,” George Bilicic, global head of power energy and infrastructure at Lazard, told Reuters.

“Companies with scale and broad expertise and ability to project into some of this complexity have been able to hold costs down,” Bilicic said. “This suggests this industry is going to become more consolidated and scale players are going to do really well.”

Lazard excluded from this analysis some aspects of Biden’s signature climate change law, dubbed the Inflation Reduction Act, which promises around $370 billion for environmentally friendly technology. This will take effect over 10 years, and Lazard said it remained open to interpretation.

Nevertheless, the bank calculated that promised production tax credits could bring the levelized cost of utility-scale solar power to between $0 and $77.


3 Responses to “Renewables, Hit by Inflation, Still Most Competitive”

  1. John Oneill Says:

    Note that the median cost of established nuclear (as opposed to new build) is now exactly half the median cost of combined cycle gas turbines (which was leading to reactors’ closure only three years ago) and 60% that of coal. It’s also on par with the lowest level for onshore wind and utility-scale solar, even before including storage, and well below the minimum for residential rooftop PV.
    So naturally, Friends of the Earth is now suing to enforce the closure of California’s last pair of reactors, Diablo Canyon, by far the State’s largest single source of low-carbon electricity, the most reliable, and now also the cheapest. Lowest emitter per kilowatt-hour, too, if it’s allowed to run for eighty years, as other US reactors have been licenced to – about a quarter of PV, and marginally below onshore wind.

    • rhymeswithgoalie Says:

      The median is a good reference for aggregate data, but does not tell you anything about a single example from the set.

      In 2016, PG&E announced plans to close the plant due to cost of operations. Gov. Newsom et al want to keep it running to 2030 to keep to the clean energy targets. (During that heat wave state of emergency, Newsom and the Ca. legislature OKed a $1.4 billion loan for PG&E to maintain operations at the plant until 2030.)

      So the question is, what is the ongoing cost of running Diablo Canyon in 2023?

      [That building kinda looks like a graphic equalizer at first glance.]

  2. John Oneill Says:

    The mandate from 2016 that 50% of the State’s power had to be from renewables, excluding large nuclear, would have meant that, since solar and wind aren’t even working for long periods, when they were working, they’d have to get effectively 100% of the market. That would have made it almost impossible for DC to break even against then rock-bottom priced gas, the alternative back-up to wind and solar.
    Governor Newsom was in favour of the negotiated closure of the plant – until the prospect of power blackouts, and massive price hikes, started looking like an electoral albatross round his neck. The demonstrated rise in emissions after the closures of Vermont Yankee, Indian Point, and San Onofre didn’t figure at all.

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