The media is rife with claims that wind and solar are cheaper than natural gas, coal, and nuclear generation. Supporting numbers almost always trace back to Lazard, a Wall Street financial advisory firm, and its levelized cost of energy report, which has been published almost every year since 2007.
The levelized cost of energy, or LCOE, compares the cost of generating electricity from different resources over their useful lifespan. It’s like the cost per mile of owning a car, after accounting for the purchase price, financing, insurance, fuel, and maintenance costs. While Lazard’s LCOE is widely cited, Lazard explicitly says that it “excludes many components and costs required to maintain grid stability and ensure reliable power to end users,” which the Always On LCOE accounts for.
Lazard’s 2026 report says that “renewables remain lowest-cost new-build generation” in 2026. Note the qualifier: “new-build.” That’s because the marginal cost of continuing to run existing, already-built generation is now cheaper than renewables.
The report highlights the “increasing competitiveness of existing generation” against new-build renewables. Utility-scale solar photovoltaic generation now costs between $40 and $98 per megawatt-hour (MWh) of electricity generated, on an unsubsidized basis. Onshore wind ranges from $37 to $99 per MWh, unsubsidized, and offshore wind falls between $105 and $167 per MWh.
Existing natural gas combined-cycle turbines, which largely exclude capital costs because they’re paid off, cost between $32 and $51 per MWh, overlapping the bottom range of solar PV. Existing coal ranges from $34 to $69 per MWh. The range of costs of existing nuclear energy falls entirely below the lower-bound range of solar, between $26 and $36 per MWh.
For utility planners and policymakers, the choice before them is usually not between building new solar and building new natural gas. It is whether to retire existing, dispatchable generation that is already paid off, or follow net-zero goals to build more intermittent wind and solar. Policymakers prefer that path, but Lazard shows that the gap between marginal cost and new-build LCOE “underscores the near-term economic case for optimizing existing generation.”
New-build generation is rising across the board, however, which Lazard attributes to “higher capital costs, sustained interest rates, tariff pass-through and supply chain repricing.” New natural gas combined-cycle ranges between $51 and $129 per MWh. New-build coal inflation-adjusted costs range from $72 to $177 per MWh. New U.S. nuclear energy ranges between $175 and $255 per MWh, which Lazard based on publicly available cost estimates for Vogtle Units 3 and 4.
Lazard doesn’t say what total system costs will be, but it does say that the cheapest power available in 2026 comes from plants already standing. Continuing to retire existing, paid-off nuclear or coal capacity to build wind and solar is trading generation priced more cheaply for generation that costs more before firming costs, and more still after.