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Solar and Wind Energy Remain Cost-Competitive Without Tax Credits

Energy and Utility

Business Honor - Solar & Wind Energy Stay Cost‑Competitive Even Without Tax Credits

Business Honor
02 July, 2025

Solar and wind tax credits debate shows renewables are economical without subsidies.

The ongoing debate in the U.S. Congress to abolish large-scale solar and wind tax credits—specifically the Investment Tax Credit (ITC) and Production Tax Credit (PTC)—has significant implications for renewable energy's long-term future in America. These credits currently finance up to 30% of solar installation expenses and offer subsidies for the generation of renewable electricity, and are therefore paramount to the competitiveness of renewable energy technologies.

But a new Lazard study reveals that, even excluding these tax credits, solar and wind energy are still less expensive forms of power production than most fossil fuels. The analysis, which compares the Levelized Cost of Electricity (LCOE), finds that unsubsidized utility-scale solar has an LCOE of $0.038 per kWh to $0.78 per kWh, while onshore wind is even more economical with the LCOE varying between $0.037 per kWh to $0.086 per kWh. These rates are compared dramatically with the prices of conventional fossil fuel sources like natural gas, which can vary between $0.138 per kWh to $0.262 per kWh.

Including tax credits, the economic benefit for solar and wind is even greater, with utility-scale solar at as low as $0.02 per kWh, and onshore wind to $0.015 per kWh. These figures are below the operating cost of even the most efficient currently existing fossil fuels plants, implying that solar and wind are not merely supplementary to fossil fuels but are now capable of entirely displacing them.

Such an analysis serves to highlight the need to continue backing renewable energy incentives for speeding the decarbonization of energy supply. In a high-interest-rate world, fossil fuel developments are more sensitive to capital expenses, and renewable energy presents an increasingly tempting prospect as an investment for future U.S. power generation.