Despite facing macroeconomic challenges and headwinds, unsubsidized utility-scale solar and onshore wind remain the most cost-effective energy generation technologies in the U.S. for the tenth consecutive year in 2025, according to Lazard’s Levelized Cost of Energy+ (LCOE+) report.

The unsubsidized LCOE for standalone utility-scale solar in 2025 ranges between $38/MWh and $78/MWh. In 2024, the range was slightly wider, ranging from $29/MWh to $92/MWh.

In 2009, the base year considered in the report, solar was still among the most expensive sources of energy, with costs ranging from $323/MWh to $394/MWh. From 2009 to 2025, the levelized cost of utility-scale solar declined at an average annual rate of 11% at the low end and 84% at the high end.

According to the report, while the technology still leads on cost, the sharp price drops seen in earlier years have leveled off since 2020. This change is due to inflation, higher interest rates, and increased capital costs. Key cost pressures include rising labor and balance-of-project expenses, as well as stabilized module prices after earlier supply chain issues. Efficiency gains and longer system lifespans have continued but at a slower pace. Even with these challenges, utility-scale solar remains one of the lowest-cost options for new power generation and continues to anchor global renewable energy strategies.

Standalone Onshore Wind

Onshore wind’s LCOE in 2025 falls within a range of $37/MWh to $86/MWh, indicating a modest increase from previous years. Earlier, sharp cost declines slowed due to rising capital costs across the supply chain. Turbine prices rose due to global commodity inflation, increased logistics and transportation expenses, and limited availability of large turbine components. At the same time, technological improvements such as larger turbines and higher capacity factors are helping offset some of the cost increases. These advancements continue to support the competitiveness of onshore wind despite upward cost pressures.

Standalone Offshore Wind

Offshore wind remains the most capital-intensive among major renewable generation technologies. According to the 2025 Lazard report, the unsubsidized LCOE for offshore wind varied between $70/MWh and $157/MWh. These high costs are driven by the complexity of offshore construction, which necessitates specialized labor and equipment for operating in marine environments. Such projects also need expensive grid connections and underwater transmission systems, along with longer development timelines compared to land-based systems.

However, the report stated that offshore wind offers significant advantages despite its high costs. It delivers high and stable capacity factors, can supply power to dense coastal areas, and enables large-scale deployment where land is limited. Lazard expects the cost of offshore wind to decrease over time as the industry scales and benefits from a more competitive supply chain and faster permitting processes.

Solar + Storage Hybrid Systems

The LCOE for utility-scale solar-plus-storage systems in 2025 was between $50/MWh and $131/MWh on an unsubsidized basis. This range represents a significant improvement over 2024, primarily due to declining battery prices and enhanced integration efficiency. A surplus of lithium-ion batteries has reduced module prices, while improvements in energy density and battery lifespan have enhanced overall system performance. These hybrid setups also use shared components, such as inverters and electrical systems, which help cut capital costs.

Solar-plus-storage projects are being deployed more widely to deliver firm, clean power during evening peaks and other periods of high demand. As battery costs continue to decline, these systems are becoming cost-competitive with traditional peaking projects, providing utilities with a reliable renewable option to support grid stability.

Energy Storage: Trends and Market Drivers

Lazard’s 2025 Levelized Cost of Storage analysis shows significant cost reductions across both utility-scale and commercial battery systems. The most significant drops are seen in utility-scale four-hour lithium-ion setups, which are being added rapidly alongside new renewable projects. This trend is driven by a global surplus of lithium-ion batteries, resulting in lower prices, alongside steady improvements in battery efficiency and performance.

Costs for utility-scale standalone systems with a capacity of 100 MW and a four-hour duration have decreased consistently over the past five years. In 2020, the levelized cost of storage ranged from $132/MWh to $245/MWh. By 2021, the range shifted slightly lower to between $131/MWh and $232/MWh in 2021. In 2022, costs rose temporarily, with the range widening to between $200/MWh and $257/MWh. This growth was followed by a moderate drop in 2023 to a range of $170/MWh to $296/MWh. In 2025, the range fell again to between $115/MWh and $254/MWh. The average values over this period reflect a compound annual decline rate of 5% at the high end and 1% at the low end of the cost range.

Battery storage is now being used for more than just frequency regulation and energy arbitrage. It plays a growing role in capacity firming and the integration of renewable energy. While the overall cost trend is downward, Lazard notes increased price volatility resulting from changing geopolitical factors, tariff policies, and shifts in the supply chain. Still, battery storage is becoming essential for expanding renewable energy and improving grid flexibility.

The report also highlights sharp cost declines for battery storage in both hybrid and standalone systems. These reductions are linked to weaker-than-expected demand for electric vehicles, which has created a surplus of battery cells, as well as to new technologies that enhance cell capacity and energy density.

Comparison with Conventional Generation

Lazard’s 2025 report continues to rank renewable energy technologies as the lowest-cost option for new power generation. In comparison, the unsubsidized LCOE for natural gas combined-cycle plants ranges from $48 to $109/MWh. Coal generation costs more than $100/MWh. Nuclear and gas peaker projects are even more expensive, making them less viable in most markets.

Solar and wind, whether standalone or paired with storage, remain cost-competitive without subsidies. Federal incentives, such as production or investment tax credits, would further strengthen this advantage. However, Lazard’s base-case LCOE figures do not include the impact of these subsidies.

Cost of Firming Intermittency

Lazard’s 2025 analysis includes a “Cost of Firming” metric to reflect the full system cost of integrating intermittent renewable energy sources. This metric estimates the additional expense of securing firm backup capacity. It is based on the effective load-carrying capability (ELCC) of the renewable source and the net cost of new entry for firm energy generation, such as gas turbines or battery storage.

As renewable use grows, ELCC typically declines. This means more backup is needed for each megawatt-hour of renewable power, which increases firming costs. Areas with high solar penetration face particularly high firming costs because peak solar output does not align with peak demand. Firming costs also vary by grid and capacity mix. For instance, using gas turbines in the region overseen by the Pennsylvania-New Jersey-Maryland Interconnection is much cheaper than using four-hour batteries in the California Independent System Operator’s area. These findings underscore the need to consider system-level costs when assessing resource adequacy and the real cost of renewable energy portfolios.