Lazard: Solar and Wind Retain Lowest LCOEs

AI generated summary

Lazard's latest report on the levelized costs of energy (LCOE) reveals that solar and wind energy remain the most cost-effective options for new power generation for the tenth consecutive year. In contrast, the LCOE for new gas-fired generation has reached a decade high, with anticipated equipment shortages likely to drive costs even higher. While existing baseload generation is becoming more competitive with new renewables, the report highlights that the LCOEs for renewables have also seen recent increases.

The report, which serves as a snapshot of the U.S. power industry over the past year, indicates that significant shifts may occur in the future due to supply chain normalization and productivity improvements. For instance, the LCOE for utility-scale solar ranges from $38/MWh to $78/MWh, while onshore wind is estimated at $37-$86/MWh without tax credits. Additionally, the report notes that battery energy storage system costs are projected to drop back to 2020 levels, influenced by market dynamics and technological advancements.