The energy sector is currently navigating a period of record-breaking power demand growth that has pushed new-build costs upward for every generation type. According to George Bilicic, head of power and energy at Lazard, the current market climate demands objective benchmarking as policymakers and investors struggle to balance reliability with affordability. While gas generation has seen a surge in new-build announcements, these projects are contending with 15-year high cost levels and historically long delivery timelines.

Existing power plants have become more economically viable as the cost of building replacement infrastructure rises. These legacy assets are being dispatched more frequently, allowing operators to spread fixed costs over higher output. However, the operational viability of conventional plants remains tethered to the volatility of fuel markets, particularly natural gas and coal, which saw year-over-year price increases in the latest data.

Storage technology is also feeling the pinch. For the first time in recent years, costs for standalone battery storage have risen, effectively reversing a long-standing trend of decline. This shift is largely attributed to new tariffs on lithium-ion imports and Foreign Entity of Concern (FEOC) restrictions, which have forced supply chains to move away from low-cost Chinese cell production. Despite these hurdles, Samuel Scroggins, managing director at Lazard, noted that renewables remain the quickest resource to deploy, though a diverse generation fleet is essential to meeting the current "speed-to-power" era of demand.