US onshore wind power is approaching zero cost!

July 30, 2024

In the constantly changing global energy landscape, the cost-effectiveness of renewable energy is becoming increasingly high. Even without subsidies, renewable energy is usually the cheapest option. The following chart summarizes the data reflected in Lazard’s latest annual Cost of Electricity (LCOE) report, revealing which sources of electricity will be the most expensive and which will be the cheapest in 2024.

The report shows that onshore wind power is also the cheapest electricity, and the cost of onshore wind power in the United States is close to zero with subsidies. The lowest cost of solar photovoltaics and on road wind power with energy storage follows closely behind. The cost of offshore wind power in the United States is currently not competitive, but it is also rapidly declining.

Onshore wind points and solar power generation costs – bargaining with subsidies

If subsidies included in the Inflation Reduction Act (IRA), such as the Investment Tax Credit (ITC), Production Tax Credit (PTC), and Energy Community Surcharge (ECA), are applied for, the cost of onshore wind power in the United States can actually be as low as $0 per megawatt hour.

The demand for energy storage solutions is also rapidly increasing. If energy storage costs are included, the minimum cost of onshore wind power will increase to $8 per megawatt hour. Although offshore wind power is more expensive, it is still a competitive option with a minimum LCOE of $71 per megawatt hour under subsidized conditions.

The economic viability of solar photovoltaics (PV) has similar appeal.

With subsidies, the minimum cost of PV is $6 per megawatt hour. If energy storage is added, the cost climbs to $38 per megawatt hour. It is worth noting that according to Lazard’s LCOE data, the highest cost of solar photovoltaics with energy storage has increased significantly from $102/MWh in 2023 to $210/MWh in 2024, but the cost of solar photovoltaics without energy storage in 2024 is still 83% cheaper compared to 2009.

The inflation in 2022-2023 has had a negative impact on solar photovoltaics and onshore wind power, pushing their maximum unsubsidized costs back to the levels of 2013 and 2015, respectively. However, from 2023 to 2024, the cost of solar photovoltaics will decrease by $4, while onshore wind power will decrease by $2.

Cost of fossil fuel power generation

For natural gas combined cycle power plants, the highest cost of efficient power generation by combining natural gas and steam turbines has increased by $7 year-on-year, reaching $108 per megawatt hour.

The natural gas peak shaving power plant used to meet peak electricity demand remains the most expensive power generation technology, with a maximum cost of $228 per megawatt hour. Compared to last year, the minimum cost of natural gas peaking power plants has decreased from $115 per megawatt hour to $110.

Cost of Nuclear Power Generation

The cost structure of nuclear energy is quite unique, with its lowest cost being the highest among all energy structures, reaching $142 per megawatt hour. However, with the extension of the lifespan of nuclear power plants, the economic benefits will also significantly improve. The minimum marginal cost of nuclear power brought about by the increase in lifespan has decreased to $32 per megawatt hour, and this significant cost reduction trend is expected to benefit 95% of nuclear power plants in the United States.

In short, driven by market forces, technological advancements, and government subsidies, the cost dynamics of energy production are shifting towards renewable energy. As renewable energy becomes increasingly affordable, they will play a leading role in the future energy structure, providing both economic and environmental benefits.