Solar costs jump 18%, but remain the cheapest generation to build, Lazard says

Meanwhile, the levelized cost of energy, a measure of the average cost of generating electricity over a power plant's lifetime, from new combined-cycle natural gas plants rose to a 15-year high, with Lazard warning that costs could climb further as equipment shortages and booming power demand pressure the market.

Record U.S. electricity demand, driven by data center growth and the electrification of sectors such as transportation, has increased the need for new generating capacity while also raising development costs.

Samuel Scroggins, head of renewables & sustainable infrastructure at the bank, said levelized costs for solar and storage have increased due to a number of factors. These include higher capital costs, elevated interest rates and inflationary pressures, such as tariff pass-through and the repricing of supply chains as they diversify away from China toward other parts of the world, including Southeast Asia.