2026 Electricity Cost, by Source

These are the fully burdened costs of each electricity source, counting capitalization, construction, maintenance, fuel depreciation, etc., as of today

Coal                        .092 to .23 per kWh

Natural Gas            .065 to .10 per kWh

Hydro                     .02 to .06 per kWh

Nuclear                    .037 per kWh

Utility Scale Solar  .03 to .05 per kWh

Residential Solar    .14 to .18 per kWh

Wind                       .024 to .075 per kWh

 

The bottom line: as of today (a couple of years ago, actually), utility scale solar was cheapest and shows signs of continuing to come down.  Hydro is #2, where you can get it, and that price has been stable for some time.  Wind is #3.  Nuclear is potentially competitive, but there are a lot of complicated externalities which make the cost in the table nearly impossible to achieve.  The recent standby, Natural Gas, is now close to the bottom of the heap, and the old standby, Coal, is significantly more expensive.

There are very few externalities from Solar.  The initial cost of the panels, once very large, is approaching trivial and the cost of the land is dominant.  They have very few environmental consequences. (although not zero: the shade changes hunting patterns for predators, for example, and productivity of farmland is somewhat reduced).   The panels last for decades, although recycling them when they eventually do wear out is a small problem.

There are more externalities for wind.  Perhaps the worst is that they interfere with the flight of some birds.   They make a noise which can be annoying if you're close, and some people find them unsightly.  They last 10-20 years, and most of them can be recycled into new windmills when the time comes.

Hydroelectric power has a very high upfront cost, and a theoretical lifetime of about a century, but the production costs are extremely low.  They turn out to have had a much more profound impact than was at first realized, especially on wildlife, such as fisheries.  Fish ladders had seemed to work, but a lot of them were defective and only a tiny fraction of the fish got through, for example.

 Natural Gas, mostly produced in the US as a byproduct of oil drilling, or hydraulic fracturing, has come on line quite strongly in the last couple of decades.  The fuel is comparatively cheap, and produces less CO2 and other pollution per kWh than burning coal or liquid fuel, such as gasoline.  But still quite a lot.  Another useful technology has been Combined Cycle turbines, which pair an internal combustion gas turbine with a steam turbine that exploits the waste heat.  They're able to get 60% or more efficiency, while conventional turbines struggle to get 40%.  But perhaps the biggest advantage is that an individual turbine can be throttled, to match demand, without much efficiency loss.  This makes it incredibly useful as a variable power source that's easily adapted to rapidly changing situations.

Coal is a historic fuel.   Because it was easily available in most of the places to industrialize early (e.g. Scotland, northern Germany, much of the US, China), it was a convenient energy source, and in a very real way, powered the industrial revolution.   It is difficult to throttle power generation to match demand, and all of the ways cost a lot of efficiency.  Moreover, it's dirty, inefficient and has lot of nasty externalities, such as open pit mining and mountaintop removal.  It's been the most expensive of the leading ways to produce energy for about 3 decades and has been rapidly declining in popularity.