Gas-Fired Electricity Becomes More Expensive
The cost of generating electricity from natural gas-fired power plants in the United States has climbed to its highest level in at least 17 years, according to new research published by Lazard Inc.
The investment bank’s latest analysis shows the levelized cost of energy (LCOE) for combined-cycle gas plants increased to $90 per megawatt-hour in 2026, up from $78 per megawatt-hour a year earlier.
The figure exceeds the previous high of $83 per megawatt-hour recorded in 2009 and represents the highest reading in Lazard’s data series.
Data Centre Growth Drives Demand
Lazard attributes much of the increase to surging electricity demand from artificial intelligence infrastructure and the rapid expansion of data centres across the United States.
George Bilicic, Global Head of Power, Energy and Infrastructure at Lazard Inc., said costs are likely to continue rising as additional computing capacity comes online to support AI applications.
Renewable Generation Costs Also Rise
Natural gas was not the only energy source to experience higher generation costs.
Lazard reported that the levelized cost of utility-scale solar power increased to $69 per megawatt-hour, while onshore wind generation rose to $68 per megawatt-hour.
Both technologies recorded increases of more than 10% from the previous year and reached their highest cost levels since at least 2014.
Higher Costs Feed Through to Consumers
The latest figures help explain why electricity prices have continued to rise in several regions of the United States.
As utilities face higher generation costs, consumers are increasingly feeling the impact through rising energy bills, making electricity affordability an increasingly prominent issue ahead of the U.S. midterm elections in November.