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+…
COE+) report released Monday. 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.