The cost of building new electricity generation is growing more and more expensive and the Trump administration’s One Big Beautiful Bill Act, which cut federal tax credits for wind and solar installations, has made it even more expensive.
Wind and solar have been the cheapest and quickest generation to build and so the two, especially solar, dominated new installations for the last several years.
For 2025, the U.S. Energy Information Administration projects that solar will make up 52%, wind 12% and battery storage 29% of the 63 gigawatts of new capacity installed. A gigawatt can provide power to 90,000 households.
One way of measuring the cost of various generating technologies is the levelized cost of energy, or LCOE. It divides the cost of building and operating a plant over its life by the amount of electricity it generates for cost per megawatt-hour.
The cost for wind in an area with consistently high winds, like Colorado’s Eastern Plains, is $17 per megawatt-hour, according to the National Renewable Energy Laboratory’s Annual Technology Baseline.
Wind and solar projects used two federal tax credits, the Production Tax Credit, which offers a 2.75-cent credit for every kilowatt-hour a wind facility generates during its first 10 years of operation and the Investment Tax Credit that allows a 30% write-off of project costs.
The credits could account for as much as 50% of project costs, according to the REPEAT project, at Princeton University.
Without the credits, the cost of wind jumps to $35 a megawatt-hour in 2026, according to an estimate by clean energy consultant Energy Innovation. Levelized cost of solar rises to $47 a megawatt-hour from $31 a megawatt-hour.
To access the credits a project has to begin before July 2026 and be in service a year later. While that may seem like a win, the risk of missing the service date may be too much of a risk for investors, said Harry Godfrey, a managing director at the energy industry trade group Advanced Energy United.
“You can’t be entirely confident project developers will come online in time, because there are a host of factors outside of your control,” Godfrey said.
Waiting 6 years for even a single turbine
The Trump administration seeks to replace wind and solar, which it calls expensive and unreliable, with “reliable, dispatchable domestic energy sources.” Dispatchable generation — such as coal- and natural gas-fired plants — can run when needed or all the time.
The problem is that these sources still turn out to be more expensive than wind and solar. Natural gas-fired generation has grown to account for as much as 45% of all U.S. electricity generation.
In 2022, the average construction cost of a natural gas plant, at $820 a kilowatt, was almost half as expensive as building wind and solar. (An LCOE calculation includes all the fuel the plant would have to buy.)
There is, however, a worldwide boom in natural gas plants and the wait time just to get a turbine is now four to six years, according to Xcel Energy testimony to the Colorado Public Utilities Commission.
The construction costs have also tripled, John Ketchum, CEO of Juno Beach, Florida-based Nextera Energy told a Houston energy conference in March. Nextra also operates wind and solar projects in Colorado.
Nextera built its last gas-fired plant in 2022 for $785 a kilowatt, to build the same plant today Ketchum said would cost $2,400 a kilowatt.
The increased upfront costs are also driving up natural gas LCOE. The financial advisory and asset management firm Lazard issues a comprehensive LCOE report each year.
“Turbine shortages, rising costs and long delivery times are expected to continue driving steep LCOE increases for gas technologies in the near term,” the report said. Placing the cost per megawatt-hour near $107.
The Lazard and NREL levelized cost methodologies may not be exactly the same making direct comparison limited.The same is the case for other megawatt-hour prices cited.
The Trump administration is making a major effort to revive and keep coal-fired plants operating with the President’s executive order Reinvigorating America’s Beautiful Clean Coal Industry and emergency orders to keep coal plants in Michigan and Pennsylvania open.
Getting a levelized cost for coal is difficult since the average age of U.S. coal-fired plants is 44 years with some as old as 60 years. The EIA estimated that in 2023 the average operating cost for a coal-fired plant was $42.67 a megawatt-hour, but costs vary from plant to plant.
Xcel Energy’s $1 billion Comanche 3 coal-fired unit in Pueblo, which went online in 2010, has been plagued by shutdowns and costly repairs. After investigating the plant the PUC staff calculated the cost of generation at $66.25 a megawatt-hour.
In 2024, the operating and maintenance costs for the plant were $41.8 million, 16% more than forecasted.
A report by MOST Policy Initiative, a public policy group in Missouri, using data from Ameren, the utility serving the state, found the cost of operating Missouri’s three coal-fired plants ranged from $45 a megawatt-hour to $65 a megawatt-hour.
The cost of renewable generation, however, is also on the rise. In testimony at the PUC, before the tax credits were cut, Xcel Energy said the cost of wind generation was up 74% and solar by 84%.
Meanwhile, electricity demand in the U.S. is projected to increase its demand for electricity by 55% over the next 20 years, spurred by data centers and the electrification of manufacturing and transportation.
Nextera’s Ketchum said over time the grid will need all kinds of new generation, including nuclear, but in the short-run renewables would be the “cheaper package.”
“Despite headwinds and macroeconomic challenges, renewables remain the most cost-competitive form of new-build generation on an unsubsidized basis,” Lazard said.”As such, renewable energy will continue to play a key role in the buildout of new power generation in the U.S.”