Q: Are renewables such as wind and solar cost competitive relative to their traditional counterparts?
— Financial advisor, Virginia
A: Yes, renewable energy technologies have reached cost-competitiveness relative to conventional energy sources. By looking at Lazard’s 2024 Levelized Cost of Energy (“LCOE”), we can see where we are today and how this trend has been building over the past 10-15 years.
1. Today, onshore wind and solar remain cost-competitive or less expensive than their conventional counterparts (coal and gas). This is irrespective of U.S. federal tax subsidies that bring renewable prices down, carbon pricing that increases conventional energy prices or sensitivity to fuel prices that can make conventionals either more or less expensive.1
Levelized Cost of Energy Comparison
Source: Lazard 2024 Levelized Cost of Energy report. Lazard analysis assumes 60% debt at an 8% interest rate and 40% equity at a 12% cost. For full set of assumptions please visit the report.
2. This trend has been accelerating since 2009, driven by technological improvements in wind and solar, both of which have increased efficiency and decreased their cost relative to traditional fuels.
Historical Levelized Cost of Energy Comparison
Lazard 2024 Levelized Cost of Energy report. Lazard analysis reflects the average of the high and low LCOE for each respective technology in each respective year. Percentages represent the total decrease in the average LCOE since Lazard’s LCOE report in 2009.
We expect this trend to continue and expect the largest portion of new power generation to come from renewables.
