Lazard Report Finds Renewables Still Lead on Cost as Power Demand Soars

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Lazard said renewable energy remains the lowest-cost option for new power generation despite inflationary pressures, tariffs, and supply chain constraints pushing up costs across virtually every generation technology, according to the firm's 2026 Levelized Cost of Energy+ (LCOE+) report released Monday.

How are rising construction costs affecting power generation economics?

Why does renewable energy remain the lowest-cost generation option?

Why are existing power plants becoming more economically attractive?

The investment bank's annual report, widely used by utilities, developers, investors, and policymakers to compare electricity generation costs, comes as the U.S. power sector faces surging electricity demand driven by data centers, artificial intelligence, and industrial electrification.

Lazard said solar and wind continue to offer the lowest unsubsidized levelized cost of new generation and are expected to account for most near-term U.S. capacity additions. At the same time, developers have announced a wave of new natural gas projects to meet rising demand despite gas-fired generation reaching its highest LCOE in 15 years and facing extended equipment delivery and development timelines.

The report argues that meeting rapidly growing electricity demand will require a diverse generation portfolio rather than reliance on a single technology. Lazard said accelerating permitting and approval processes for new generation and transmission infrastructure will be critical to maintaining grid reliability while accommodating rising loads.

The firm also found that existing power plants have become more economically attractive as escalating construction costs, inflation, tariffs, supply chain bottlenecks, and permitting delays make replacing generation increasingly expensive. Higher utilization rates are allowing existing assets to spread fixed costs across greater output, although operating costs for conventional plants remain exposed to volatile natural gas and coal prices.

Battery energy storage costs increased this year, reversing recent declines. Lazard attributed the shift largely to tariffs on lithium-ion battery imports and new U.S. restrictions on batteries sourced from entities of concern, which have accelerated efforts to diversify supply chains away from China toward Southeast Asia and domestic manufacturers. Despite the higher costs, the report says storage remains an essential component for integrating larger shares of intermittent renewable generation.

The report underscores a broader shift in power markets as developers prioritize technologies capable of delivering capacity quickly amid tightening supply-demand balances. Lazard said the combination of rising electricity demand, higher construction costs, and reliability concerns is increasing the value of both renewable energy and existing generation assets while reinforcing the need for investment across the full power system.

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Sinergia Empresarial continuará el seguimiento de esta información sobre lazard Report Finds Renewables Still Lead on Cost as Power Demand Soars y ampliará la cobertura conforme se confirmen nuevos elementos relevantes para el ecosistema empresarial.