Analysis of U.S. Energy Generation Costs and Implications for Sustainable Development Goals

Executive Summary: Shifting Energy Policies and the Pursuit of SDG 7

Recent policy changes, including the One Big Beautiful Bill Act, have eliminated key federal tax credits for renewable energy, escalating the cost of new electricity generation. This development presents a significant challenge to the advancement of Sustainable Development Goal 7 (SDG 7), which aims to ensure access to affordable, reliable, sustainable, and modern energy for all. While solar and wind have dominated new installations due to their low costs, new economic pressures threaten this trend. This report analyzes the comparative costs of renewable and fossil fuel energy sources and assesses the implications for achieving the Sustainable Development Goals.

The Economic Viability of Renewable Energy and SDG 7

Impact of Federal Policy on Clean Energy Affordability

The elimination of the Production Tax Credit (PTC) and Investment Tax Credit (ITC), which previously accounted for up to 50% of project costs, directly impacts the affordability aspect of SDG 7. The levelized cost of energy (LCOE), a key metric for comparing generation technologies, demonstrates a sharp increase for renewables without these incentives.

• Wind Power LCOE: Rises from $17 per megawatt-hour with credits to an estimated $35 per megawatt-hour without them.
• Solar Power LCOE: Rises from $31 per megawatt-hour with credits to an estimated $47 per megawatt-hour without them.

The deadline for projects to begin construction by July 2026 to qualify for remaining credits introduces significant investment risk, potentially slowing the development of infrastructure critical for SDG 9 (Industry, Innovation, and Infrastructure).

Projected Energy Mix and Progress Towards Clean Energy Targets

Despite policy headwinds, projections for 2025 indicate a continued, albeit challenged, transition towards cleaner energy sources, aligning with the objectives of SDG 7 and SDG 13 (Climate Action). Of the 63 gigawatts of new capacity anticipated, the composition is as follows:

1. Solar: 52%
2. Battery Storage: 29%
3. Wind: 12%

This mix underscores the industry’s recognition of renewables as a vital component for future energy needs, essential for building SDG 11 (Sustainable Cities and Communities).

Challenges in Fossil Fuel Infrastructure and Climate Action (SDG 13)

Natural Gas: Rising Costs and Infrastructure Delays

The push towards “dispatchable” energy sources like natural gas is undermined by severe economic and logistical challenges. These hurdles make natural gas a less viable solution for achieving affordable energy under SDG 7 and conflict with the climate goals of SDG 13.

• Construction Costs: Have tripled, with one developer reporting an increase from $785 per kilowatt in 2022 to an estimated $2,400 per kilowatt for a new plant.
• Supply Chain Delays: Wait times for essential components like gas turbines now extend from four to six years, impeding the development of reliable energy infrastructure.
• Levelized Cost: The LCOE for natural gas is projected to approach $107 per megawatt-hour, making it significantly more expensive than renewables, even without subsidies.

Coal Power: Economic and Environmental Unsustainability

Efforts to reinvigorate the coal industry run counter to global sustainability targets. The high operational costs and environmental impact of coal power make it an unsustainable option for long-term energy strategy. The operational costs of existing coal plants are high and variable, challenging the affordability tenet of SDG 7.

• Average Operating Cost (2023): The EIA estimated an average of $42.67 per megawatt-hour.
• Plant-Specific Costs: Xcel Energy’s Comanche 3 unit has a calculated generation cost of $66.25 per megawatt-hour, while costs for Missouri plants range from $45 to $65 per megawatt-hour.

Investing in aging and inefficient coal infrastructure detracts from the urgent need for climate action as outlined in SDG 13.

Future Outlook: Balancing Energy Demand with Sustainable Infrastructure (SDG 9 & SDG 11)

Projected Growth in Electricity Demand

U.S. electricity demand is projected to increase by 55% over the next two decades, driven by data centers and the electrification of industry and transport. Meeting this demand requires a massive buildout of new generation, placing a strong emphasis on the development of resilient and sustainable infrastructure as mandated by SDG 9 to support the growth of sustainable communities under SDG 11.

Conclusion: The Imperative of Renewables for Sustainable Development

A comprehensive analysis confirms that despite macroeconomic challenges and rising costs across all technologies, renewable energy remains the most cost-competitive form of new-build generation on an unsubsidized basis. To meet future energy demand and make meaningful progress on the Sustainable Development Goals, particularly SDG 7, SDG 9, SDG 11, and SDG 13, a strategic focus on expanding renewable energy capacity is essential. The Lazard financial advisory report concludes that renewable energy will continue to play a key role in the buildout of new power generation, representing the most viable path toward a sustainable and affordable energy future.

SDGs Addressed in the Article

SDG 7: Affordable and Clean Energy

• The article is centered on the cost, affordability, and deployment of various energy sources, including clean energy like wind and solar, and fossil fuels like natural gas and coal. It directly discusses the transition towards a cleaner energy mix.

SDG 9: Industry, Innovation, and Infrastructure

• The text details the construction of new energy infrastructure, such as solar farms, wind turbines, and natural gas plants. It also highlights the rising electricity demand from industrial sectors like data centers and manufacturing, linking energy infrastructure to industrial growth.

SDG 13: Climate Action

• By comparing renewable energy sources (wind, solar) with fossil fuels (coal, natural gas), the article implicitly addresses climate change mitigation. Policies mentioned, such as tax credits for renewables or efforts to keep coal plants open, are national measures that directly impact greenhouse gas emissions and climate goals.

Specific Targets Identified

SDG 7: Affordable and Clean Energy

• Target 7.1: Ensure universal access to affordable, reliable and modern energy services. The article extensively discusses the “levelized cost of energy (LCOE)” for different technologies, which is a direct measure of affordability. It compares the costs of wind, solar, natural gas, and coal, highlighting how policy changes affect the price of electricity for consumers and industry.
• Target 7.2: Increase substantially the share of renewable energy in the global energy mix. The article provides specific projections from the U.S. Energy Information Administration for 2025, stating that “solar will make up 52%, wind 12% and battery storage 29% of the 63 gigawatts of new capacity installed,” directly addressing the share of renewables in new installations.
• Target 7.a: Enhance international cooperation to facilitate access to clean energy research and technology… and promote investment in energy infrastructure and clean energy technology. The article discusses the role of federal tax credits, such as the Production Tax Credit and the Investment Tax Credit, as key policy tools to promote investment in wind and solar infrastructure. The removal of these credits is shown to directly impact project costs and investment decisions.

SDG 9: Industry, Innovation, and Infrastructure

• Target 9.1: Develop quality, reliable, sustainable and resilient infrastructure. The article discusses the development of energy infrastructure, contrasting “reliable, dispatchable” sources like natural gas with intermittent renewables like wind and solar. It also touches on the resilience and reliability issues of older infrastructure, such as the “plagued by shutdowns and costly repairs” Comanche 3 coal plant.
• Target 9.4: Upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies. The entire discussion of replacing coal and natural gas plants with wind and solar installations is an example of upgrading infrastructure with cleaner technologies to meet future energy demand, which is projected to increase by 55% due to “data centers and the electrification of manufacturing and transportation.”

SDG 13: Climate Action

• Target 13.2: Integrate climate change measures into national policies, strategies and planning. The article highlights the impact of national policies on the energy sector. The “One Big Beautiful Bill Act,” which cut federal tax credits, and the executive order “Reinvigorating America’s Beautiful Clean Coal Industry” are presented as national strategies that run counter to climate goals, while the previously available tax credits are shown as policies that supported a transition to cleaner energy.

Indicators for Measuring Progress

Indicators for SDG 7 Targets

• Levelized Cost of Energy (LCOE): The article explicitly uses LCOE as a key metric to compare the affordability of different energy technologies. It provides specific figures, such as wind at “$17 per megawatt-hour,” solar rising to “$47 a megawatt-hour” without credits, and natural gas near “$107 per megawatt-hour.” This directly measures progress towards affordable energy (Target 7.1).
• Share of Renewables in New Capacity: The article cites a projection that “solar will make up 52%, wind 12%” of new capacity in 2025. This percentage is a direct indicator for measuring the increasing share of renewable energy in the energy mix (Target 7.2).
• Financial Incentives for Clean Energy: The value of the Production Tax Credit (“2.75-cent credit for every kilowatt-hour”) and the Investment Tax Credit (“30% write-off of project costs”) are mentioned as indicators of the level of government support and investment promotion for clean energy technology (Target 7.a).

Indicators for SDG 9 Targets

• Total New Generation Capacity: The article mentions “63 gigawatts of new capacity installed” for 2025. This figure serves as an indicator of the expansion of energy infrastructure (Target 9.1).
• Construction Cost per Kilowatt: The text provides specific construction costs, such as a natural gas plant increasing from “$785 a kilowatt” in 2022 to a projected “$2,400 a kilowatt” today. This indicator measures the investment cost required to build and upgrade sustainable infrastructure (Target 9.4).
• Projected Increase in Electricity Demand: The projection that U.S. electricity demand will increase by “55% over the next 20 years” serves as an indicator of the future infrastructure needs driven by industrial and transport electrification (Target 9.4).

Indicators for SDG 13 Targets

• Impact of National Policies on Energy Costs: The article implies an indicator by showing how the removal of tax credits increases the cost of wind to “$35 a megawatt-hour” and solar to “$47 a megawatt-hour.” This cost change is a direct result of a national policy, indicating how such policies can either support or hinder climate action (Target 13.2).

Summary of Findings

Source: coloradosun.com