Americas Utilities Power Levelized Cost of Energy Update Costs Rising Across Resource Types, but Solar Wind Remain Attract...

Equity Research 20 August 2026 | 12:01AM EDT

Levelized Cost of Energy Update: Costs Rising Across Resource Types, but Solar/Wind Remain Attractive

In this update, we refresh our levelized cost of energy (LCOE) model to reflect current Carly Davenport | construction costs, updated fuel assumptions and the changes to clean energy tax Goldman Sachs & Co. LLC credits under the OBBBA now that the safe harboring deadline has passed. Since our Brian Singer, CFA last update, the cost to build new generation has moved higher across most | Goldman Sachs & Co. LLC technologies, with combined cycle natural gas seeing some of the largest increases in overnight capital costs. Despite these increases, utility-scale solar and onshore wind Brendan Corbett | remain among the lowest-cost sources of new generation in our analysis, particularly Goldman Sachs & Co. LLC for projects that have achieved safe-harbor eligibility for tax credits. In this report, Beatriz Abreu, CFA our GS SUSTAIN team updates its latest Green Reliability Premium analysis — the | supply cost to add round-the-clock power sources that incorporate redundancies to Goldman Sachs & Co. LLC

mitigate day-to-day and seasonal intermittencies. Jaya Patel | Goldman Sachs & Co. LLC Growing power demand and higher construction costs support an increasing Ananya Jaison generation capital requirement, although affordability remains a key constraint as | utilities evaluate resource additions. We now estimate ~$433 bn of utility-scale Goldman Sachs India SPL

generation investment through 2030 ($368 bn previously). While renewables and storage remain attractive from an economic standpoint in many markets, natural gas is still likely to play an important role given its reliability and dispatchability. Despite these increases, utility-scale solar and onshore wind remain among the lowest-cost sources of new generation in our analysis, particularly for projects that have been safe-harbored. We highlight Buy-rated Xcel Energy (XEL) as well positioned to capture growing generation needs through its renewables scale, selected company-owned RFP projects and expanding capex opportunity.

In this note, we update our LCOE model, which estimates the levelized cost of energy for new-build generation across fuel types. Following the enactment of the OBBBA and the passing of the safe harbor deadline, we evaluate generation economics under both safe-harbored and non-safe-harbored scenarios to assess the impact of changes to clean energy tax credits. While the reduction in tax credit increases costs for certain renewable technologies, higher capital costs for natural gas and other thermal generation continue to support the relative competitiveness of utility-scale solar and onshore wind. As utilities look to meet increasing demand, we continue to

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Goldman Sachs Americas Utilities: Power

believe renewables can help bridge near-term capacity needs given their shorter development timelines, until resources such as gas and nuclear are brought into service. We also continue to see demand pull on renewables from large load customers.

Exhibit 1: We update our capital costs and fixed/variable O&M to reflect current cost dynamics Net after-tax capital cost, fixed O&M, variable O&M, and fuel costs for various fuel types under both scenarios PV - Commercial PV - Residential $125 $18 $143 Natural Gas Combined Cycle Brownfield NG Peaker $73 $10 $5 $32 $120 PV - utility Offshore Wind $91 $25 $116

Scrubbed Coal - APP $46 $8 $5 $48 $107 Onshore Wind $1 Advanced Nuclear $70 $19 $5 $8 $104 $0

Solar + storage $64 $8 $25 $97 Safe harbored - Net Cap Co Non-safe harbored - Net Ca PV - Commercial $77 $10 $88

Offshore…