What is the cheapest energy source in America?

In the evolving global energy landscape, renewable energy sources are becoming increasingly cost-effective. Even without subsidies, renewable energy is often the cheapest option.

This diagram was created by visual capitalists Selin Oguz and Ryan Bellafontaine in collaboration with the National Public Utilities Council, and shows the most costly power source and the least costly power source in 2024 using Lazard data.

When subsidies included in the Inflation Control Act, such as investment tax credits, production tax credits, and energy community additions, are applied, the cost of onshore wind power generation is effectively 0 dollars per megawatt hour (MWh).

Demand for storage solutions is growing rapidly. Including storage, the minimum cost of onshore wind rises to $8 per MWh. Offshore wind is still a competitive option, albeit more expensive, at a minimum of $71/MWh with subsidies.

*2020 LCOE adjusted for inflation

When using grants, the minimum cost is $6 per MWh. If batteries are included, it is 38 dollars per MWh. According to Lazard, the cost of solar power generation alone is 83% lower than in 2009, even as of 2024, but what is noteworthy is that the maximum cost of solar power generation, including storage batteries, has risen drastically from 102 dollars in 2023 to 210 dollars in 2024.

Inflation from 2022 to 2023 hit solar power generation and onshore wind power generation, and the maximum cost without subsidies was pushed back to 2013 and 2015 levels, respectively. However, solar power fell by $4 and onshore wind by $2 between 2023 and 2024.

For gas combined-cycle power plants that combine natural gas and steam turbines for efficient power generation, the maximum price increased by $7 compared to the previous year to $108 per MWh.

*2020 LCOE adjusted for inflation

Gas peak plants used to meet peak power demands remain the most expensive option, with a maximum cost of $228/MWh. Interestingly, the minimum price for these power plants has dropped slightly from $115 to $110 per MWh compared to last year.

Nuclear energy shows a unique cost structure with a minimum price of $142 per MWh, which is the highest of all energy sources.

However, by extending the life span of nuclear power plants, the economy will improve drastically. Due to this extension, the minimum marginal cost of nuclear power has dropped to $32 per MWh, and 95% of US nuclear power plants have benefited from this cost reduction.

According to Lazard, the cost dynamics of energy production are shifting towards renewable energy due to market principles, technological advances, and government subsidies. As renewable energy becomes cheaper, renewable energy will provide economic and environmental benefits and play a dominant role in the future energy mix.