Renewables Maintain Cost Edge Despite Rising Energy Sector Pressures — Lazard, Inc.

Event summary

Lazard's 19th annual LCOE+ report finds renewables remain the lowest-cost new-build generation despite rising costs across all energy technologies.
Unprecedented power demand growth is driving up announced new-build gas generation, even as its levelized cost reaches a 15-year high.
Storage costs have reversed recent declines due to tariffs on lithium-ion battery imports and supply chain diversification away from China.
Existing generation assets are becoming more economically competitive as rising new-build costs make replacement capacity more expensive.

The big picture

The energy sector is facing unprecedented demand growth and rising costs across all generation technologies, reinforcing the need for a diverse generation fleet. Lazard's report highlights that while renewables remain cost-competitive, the increasing focus on reliability and affordability is reshaping how stakeholders think about the generation mix. The analysis underscores the critical importance of accelerating permitting processes to meet growing demand and enhance system reliability.

What we're watching

Permitting Delays: The pace at which permitting and approval processes are accelerated will determine the energy sector's ability to meet growing demand.
Fuel Price Volatility: How fluctuations in natural gas and coal prices affect the marginal cost of operating conventional generation.
Supply Chain Diversification: Whether battery storage costs can stabilize as supply chains shift away from Chinese manufacturing.