Renewables remain competitive with an added firming cost

In the PJM region, in the eastern United States, solar accounts for only 12% of capacity considered reliable at peak demand. Guaranteeing the remaining 88% requires adding $37/MWh, bringing the generation cost from $86 to $123/MWh. This is the new element in Lazard’s annual report: the investment bank now measures the additional cost required to guarantee the availability of the electricity produced, not just the cost of the electrons generated.

This metric, called “Levelized Firming Cost,” estimates the additional cost required to guarantee the availability of the electricity produced by each technology. In the PJM example, firmed solar—with this firming cost added—remains within the range of a new combined-cycle gas plant, at $51–129/MWh. The additional cost is real, but it is not enough to push solar out of the group of competitive solutions.

The full calculation puts solar at $98–167/MWh, and wind at $95–155/MWh. A combined-cycle gas plant comes in at $51–129/MWh, while a peaker turbine reaches $144–276/MWh. The LCOE, or levelized cost of electricity, puts photovoltaics at $40–98/MWh and onshore wind at $37–99/MWh without the firming cost; new nuclear remains at $175–255/MWh.

For decision-makers building new capacity, the practical conclusion is less spectacular than it is solid: including the firming cost is not enough to push renewables out of the group of competitive solutions. It does, however, change how projects are compared by revealing the expense required to make their output available when the power system needs it.

The cost trajectory still calls for caution. After more than a decade of declining LCOE, gains are stabilizing as a result of higher capital costs, supply chain pressures and rising construction costs. Storage illustrates this slowdown: for a 100 MW lithium-ion battery with four hours of duration, LCOS, with “S” standing for storage, rose from $254/MWh in 2025 to $292/MWh in 2026, or +15%.