Typical Overnight CapEx (USD/kW, 2025):
Technology | CapEx (UDS/kW) | Notes |
Natural Gas (CCGT) | $1,000-1,500 | U.S. avg. $1,463/kW in 2025, projected to fall to $1,191 by 2050 |
Coal (Supercritical) | $2,000-3500 | Higher in OECD due to regulation; lower in China/India |
Onshore Wind | $1,300-2,200 | Site-dependent; U.S. avg. $1,400/kW |
Solar PV (Utility-scale) | $850-1,400 | U.S. avg. $1,000-$1,100/kW; lowest in sun-rich, low-labor markets |
Offshore Wind | $3,000-5,000 | High marine, foundation, and grid costs |
Nuclear (New Builds) | $6,000-12,000 | U.S./Europe at high end; Asia lower with standardized builds |
- U.S. utility CapEx is at record highs, projected to exceed $212 billion in 2025 and over $1 trillion from 2025-2029, driven by grid modernization, renewables, and data center demand.
- Renewables often appear low-cost per unit of energy, but their capacity cost rises significantly when storage, redundancy, and grid upgrades are included.
Major Cost Drivers
- Transmission expansion: New lines are needed to connect remote wind/solar sites to demand centers. In the U.S., ~42% of utility CapEx in 2024-2025 is allocated to transmission and distribution upgrades.
- Interconnection upgrades: Substations, transformers, and protection systems often require costly upgrades to accommodate variable renewables.
- Inverter synchronization: Renewables require advanced inverters to maintain grid frequency and stability, adding both CapEx and operational complexity.
- Curtailment and lost revenue: During periods of oversupply (e.g., sunny/windy low-demand hours), renewables may be curtailed, reducing revenue and effective utilization.
- Permitting and delays: Interconnection queues and regulatory reviews are now a top barrier to new wind and solar deployment in the U.S., with some projects facing multi-year delays and escalating costs.
Systemic Investment and Economic Impact
- U.S. power sector investments could total $1.4 trillion from 2025-2030, with a significant share for grid upgrades and renewable integration.
- Data center growth (AI, cloud) is a new driver of both generation and grid CapEx, with electricity demand from this sector expected to rise from 6-8% to 11-15% of total U.S. generation by 2030.
- Grid upgrade and integration costs are a major factor in rising retail electricity prices, which climbed 23% from 2019-2024 in the U.S.
Notable Points
- Renewable CapEx per kW is lower than coal/nuclear but rises sharply when storage and grid upgrades are included.
- Transmission and interconnection costs are now among the top barriers to new renewable deployment in the U.S. and Europe.
- Utilities and regulators are increasingly focused on total system cost, not just plant CapEx, as grid complexity and reliability challenges grow.