In most places, yes. New solar and wind projects now produce electricity at a lower cost per megawatt-hour than new coal or natural gas plants, even without subsidies. The gap has widened dramatically over the past decade, and the trend shows no sign of reversing. But the full picture includes storage, grid upgrades, and hidden subsidies that shift the math in ways worth understanding.
Direct Cost Comparisons
The most widely cited measure for comparing energy sources is the levelized cost of energy, or LCOE. It captures the total lifetime cost of building and operating a power plant divided by the total energy it produces. Lazard, a financial advisory firm that publishes annual LCOE analyses, released its 2024 update with these unsubsidized ranges per megawatt-hour:
- Onshore wind: $27 to $73
- Utility-scale solar: $29 to $92
- Natural gas (combined cycle): $45 to $108
- Coal: $69 to $168
At the low end, the cheapest new wind and solar projects cost roughly 40 to 60 percent less than the cheapest new gas plants, and less than half the cost of coal. Even at the high end of the renewable ranges, solar and wind overlap with or beat the midrange of fossil fuels. These figures reflect unsubsidized costs, meaning they don’t factor in tax credits or government incentives that would push renewable prices even lower.
The ranges exist because costs vary by location. A solar farm in Arizona produces more electricity per panel than one in Michigan. A wind farm on the Great Plains captures stronger, steadier winds than one in the Southeast. Fuel prices, labor markets, and permitting timelines all affect the fossil fuel side. But the core takeaway holds across most geographies: building new renewables is now cheaper than building new fossil fuel plants.
Why Renewables Got So Cheap
Solar panel costs have dropped roughly 90 percent since 2010. Wind turbines have followed a similar, if less dramatic, curve. These declines come from manufacturing scale, improved technology, and competitive global supply chains. Once a solar or wind farm is built, its fuel cost is zero. Sunlight and wind are free. Fossil fuel plants, by contrast, must continuously purchase coal or natural gas for the entire life of the facility, which exposes them to volatile commodity markets.
This distinction matters over time. A natural gas plant built today locks in decades of fuel purchasing risk. A solar farm’s costs are almost entirely upfront. That predictability is one reason utilities, even in traditionally fossil-fuel-friendly states, have been choosing renewables for new capacity.
The $7 Trillion Subsidy Problem
Fossil fuels benefit from enormous public subsidies that rarely appear on your electricity bill. The International Monetary Fund estimated that global fossil fuel subsidies reached $7 trillion in 2022, equivalent to 7.1 percent of global GDP. That figure jumped $2 trillion from 2020 levels, largely because governments stepped in to cushion consumers from surging energy prices.
These subsidies take two forms. Explicit subsidies are direct government payments or tax breaks that keep fuel prices artificially low. Implicit subsidies are harder to see: they represent the cost of air pollution, climate damage, and health impacts that fossil fuel producers don’t pay for. When someone with asthma visits the emergency room due to coal plant emissions, that cost lands on the healthcare system, not the power company.
The IMF projects these subsidies will rise to $8.2 trillion by 2030 as fuel consumption grows in emerging economies. If fossil fuel prices reflected their true cost to society, the price gap with renewables would be far wider than current LCOE comparisons suggest.
What Storage and Grid Upgrades Add
The sun doesn’t always shine, and the wind doesn’t always blow. This is the most common objection to renewables, and it’s a real consideration. To deliver reliable electricity around the clock, solar and wind need battery storage or backup generation, and the grid itself needs upgrades to handle variable power flows.
Battery costs are falling but remain significant. The National Renewable Energy Laboratory projects that a four-hour lithium-ion battery system will cost between $255 and $366 per kilowatt-hour in 2026. By 2035, those costs are expected to drop to between $147 and $339 per kilowatt-hour, with further declines to $108 to $307 by 2050. The wide ranges reflect uncertainty about manufacturing scale, material costs, and policy support.
Beyond batteries, integrating high levels of renewables into the grid creates costs that the basic LCOE metric doesn’t capture. According to a 2025 analysis cited by the Grantham Research Institute at the London School of Economics, these integration costs, which include backup power reserves, grid expansion, and balancing supply with demand, can reach $25 to $30 per megawatt-hour in systems with a high share of renewables. A United Nations expert report noted that relying on LCOE alone “risks underestimating true system costs” by ignoring these factors.
Adding $25 to $30 per megawatt-hour to the cost of solar or wind still keeps renewables competitive with or cheaper than new coal plants. Against natural gas, the picture gets tighter, especially at lower renewable penetration levels where less storage is needed. But as battery prices continue declining, this gap will keep shifting in renewables’ favor.
New Plants vs. Existing Plants
One important nuance: the cost comparisons above are for new construction. An existing coal or gas plant that has already been paid off can produce electricity at just its fuel and maintenance cost, which can be lower than building a brand-new solar farm. This is why older fossil fuel plants don’t shut down overnight even when new renewables are cheaper.
That said, this advantage is eroding. In many U.S. markets, new solar and wind are now cheaper than the operating costs alone of existing coal plants. This has driven a wave of early coal plant retirements. Natural gas plants, with lower fuel costs, remain more competitive on an operating basis, but they face growing pressure as renewable-plus-storage costs continue to fall.
What This Means for Electricity Prices
Cheaper generation costs don’t always translate directly into lower electricity bills. Your bill includes transmission, distribution, grid maintenance, and utility profit margins on top of the cost of generating the power itself. Regions investing heavily in new transmission lines or grid upgrades to accommodate renewables may see those costs passed through in the short term, even as generation costs drop.
Over the long term, the economics point clearly in one direction. Renewable generation costs have fallen consistently for over a decade, while fossil fuel costs remain tied to commodity prices that swing unpredictably. Countries and states with high renewable penetration, like Denmark, parts of Australia, and Texas, have seen wholesale electricity prices drop during periods of high wind and solar output, sometimes to zero or below. The challenge is ensuring those low wholesale prices translate into savings for consumers, which depends on grid design, regulation, and policy choices that vary widely by region.