Clean energy still beats fossil fuels on cost, despite, well, everything

Pretty much every type of energy is getting more expensive in the U.S., but clean energy is still a better bet than fossil fuels.

That’s the topline from investment bank Lazard’s latest annual report on the levelized cost of energy, or LCOE — a metric widely used to compare how expensive different sources of electricity are. Put simply, it expresses the present-day price of generating a megawatt-hour of electricity from a solar farm, a gas plant, or another power source, all while accounting for that source’s full lifetime operating costs. For example, it takes into consideration that a solar farm’s fuel and operational costs are tinier than a fossil fuel plant’s.

For the last decade, Lazard’s reports have basically reached the same conclusion: Onshore wind and utility-scale solar have a lower LCOE than fossil fuels. While that’s still true this year, the average LCOE of onshore wind and solar did surge by 11% and 18%, respectively, from last year, thanks to the loss of federal renewable energy tax credits, increased tariffs, high interest rates, and other challenges.

But the fossil fuel sector also faced headwinds over the past year, as a supertight market for turbines drove up the cost and timeline of building a gas plant. The LCOE of gas power from modern “combined-cycle plants” — which was already about $20 higher per megawatt-hour than solar’s and onshore wind’s in 2025 — rose by 15%. Still, those higher prices and construction delays haven’t stopped developers from pursuing ambitious gas projects as the AI boom sparks a scramble for on-demand power.

Gas peaker plants and nuclear facilities have the highest levelized cost of energy, while renewables and gas combined-cycle plants are among the lowest, according to Lazard’s LCOE report.

Although LCOE is a pretty handy way of comparing energy costs across sources, it has its limitations, the Clean Air Task Force argued in a report last year. The climate advocacy group says LCOE isn’t a good method for long-term decarbonization planning because it doesn’t account for many real-world concerns, like a power source’s land and health impacts or its ability to generate nonstop electricity.

Even so, plenty of evidence indicates that renewables will retain their cost-competitive edge. For one, they’re not subject to rocky fuel prices like oil and gas are — something that’s been on full display as conflict in the Middle East continues. And while solar and wind power generation remain at the mercy of the weather, batteries are making their fatal flaw of intermittency a thing of the past.

This week was another hot one in the Northeast, though temperatures weren’t quite as bad as they were earlier in July, when a major heat wave tested — but didn’t knock out — the power grid.

As I wrote last week, clean energy played a big role in meeting soaring demand while millions of people cranked up their air conditioners. Some New York City households even kept cool without adding to the grid’s burden. Our reporter Maria Gallucci is one of a few hundred New Yorkers participating in a pilot program that provides apartment dwellers with a small battery pack to plug their window AC into, reducing stress on the electric system, helping prevent blackouts, and even earning them a little cash.

Maria stayed on the heat wave beat with a look at how offshore wind tackled spiking power demand in New England. The region had to turn to oil power last year when it faced a similar hot spell, but this year, the emergence of more offshore wind meant the grid didn’t need as much of the dirty fossil fuel.