Are coal and oil cheaper than clean energy in 2025? In the United States, the cost difference no longer relies on old assumptions. Prices for solar and wind have dropped sharply, while coal and oil costs are often higher than they appear due to hidden expenses. However, other factors also come into play when calculating the true cost of each energy source, making choosing from today’s available energy systems more complex than looking at the upfront price tag.
Levelized cost of energy (LCOE) is a key financial metric used to evaluate and compare the cost-effectiveness of various energy technologies. It represents the average cost per megawatt-hour (MWh) of electricity generated over the lifetime of a project.
LCOE account for all relevant expenses, including:
- Capital costs,
- Operations,
- Maintenance,
- Fuel (if applicable), and
- Financing.
By dividing these total lifetime costs by the total amount of electricity the system is expected to produce, LCOE provides a standardized measure that helps policymakers, investors, and utilities assess the economic competitiveness of different energy sources.
LCOE is especially valuable when comparing traditional fossil fuels such as coal and oil to renewable ones like solar and wind energy. Fossil fuel plants often have high ongoing fuel and environmental compliance costs, which can make their LCOEs volatile, especially as fuel prices fluctuate. In contrast, renewable energy systems typically have higher upfront capital costs but lower ongoing expenses since they rely on free fuel sources like sunlight and wind.
2025 LCOE Estimates at a Glance:
- Utility-scale solar PV: $29 – $92 per MWh
- Onshore wind power: $27 – $53 per MWh
- Offshore wind power: $74 – $139 per MWh
- Coal: $69 – $169 per MWh
- Natural gas: $110 – $228 per MWh
Energy prices shape the choices we make as a society. Understanding energy production and consumption trends is key to anticipating today’s electric bills and beginning tomorrow’s energy planning.
Coal, oil, and natural gas remain major players in the U.S. energy mix. Their costs, however, can fluctuate depending on market conditions, seasons, and region.
The LCOE of electricity generation from coal plants is between $69 and $169 per MWh. This number is expected to fluctuate wildly by region and season, however, according to the U.S. Energy Information Administration (EIA).
Prices have crept up over the last three years, mostly due to market volatility and stricter greenhouse gas emissions rules. While energy from coal-fired power plants may look affordable on the surface, its price is often lowered by government subsidies and older infrastructure that hides true operational costs.
Oil-fired electricity is rare in the U.S., with many using this energy resource as backup or for remote power grids. The cost of electricity from oil can exceed $150 per MWh, often making it even pricier than coal or gas alternatives. While oil prices have been relatively stable, the lack of new investments and tighter regulations are pushing actual generation costs higher.
Natural gas sets the baseline for power generation across much of the country. Its LCOE is between $110 and $228 per MWh. Natural gas typically boasts lower costs per MWh than coal or oil per, although prices often spike during extreme weather.
Clean sources of energy are no longer on the fringe. Solar and wind have become the go-to resources for new large-scale electric projects. Costs have dropped so much that in many locations, renewables now source electric power for less than coal, oil, and natural gas, even without subsidies. In 2025 alone, the cost of renewable energy is expected to drop by 2–11% after already breaking cost records last year.
Onshore wind projects benefit from new turbine technology, which has slashed operating costs. The LCOE to generate electricity from new onshore wind farms in 2025 is between $27 and $53 per MWh.
Offshore wind energy projects represent vast potential for renewable power sources, especially for East Coast states. The estimated 2025 offshore wind LCOE is $74 to $139 per MWh.
Thanks to continued improvements in panel manufacturing and lower construction costs, 2025 marks a new low for solar electricity prices. Utility-scale solar projects are now delivering electricity at a LCOE of $29 to $92 per MWh.
Coal and oil receive strong financial support from both the United States and world governments. These subsidies come in many forms, from direct cash support to tax breaks that ease the cost of drilling and mining. Globally, explicit subsidies reached around $1.5 trillion in 2022. When governments keep fossil fuel prices artificially low, it distorts the true price of energy, making coal and oil look less expensive than they are at first glance.
Subsidies are just the start. Burning coal and oil brings extra costs like:
- Air pollution: Linked to asthma, heart and lung diseases, and early death, putting pressure on local health systems.
- Environmental damages: Including water contamination, land loss, and threats to global climate stability.
- Economic impacts: Missed work days and lost productivity due to illness, alongside storm and wildfire costs made worse by climate change.
When these costs are added up, the true price of coal and oil is much higher than what’s seen upfront on utility bills.
U.S. clean energy receives backing from federal credits and state policies. The most well-known energy tax credits are Investment Tax Credits (ITC) for solar power, and Production Tax Credits (PTC) for wind projects. Many states have added their own incentives to boost solar panels on homes and support community solar and battery storage. These supports speed up the adoption of renewable energy sources.
That said, support for clean energy is still much lower than that for fossil fuels, even as renewables take a growing share of the power mix. This lack of extra financial backing can affect pricing.
EIA reports provide a clear picture of where US energy prices are headed: forecasts show coal and oil will face higher costs, in part due to stricter emissions rules and aging plants. Clean energy, powered by innovations in solar, wind, and storage, are projected to be cheaper and cheaper to build and run.
Solar panels and wind turbines continue to benefit from innovation. With each new wave of manufacturing, clean power equipment becomes more energy efficient and cost effective to install. Energy storage costs are also dropping thanks to better battery technology and bigger economies of scale.
As the market builds more renewables, fixed project costs drop through volume, spreading savings to households and businesses nationwide.
As the energy transition to cleaner forms of energy generation accelerates, households and businesses stand to benefit from lower bills, cleaner air, and fewer risks from market swings. Recent cost data leaves little doubt: clean energy can outpace coal and oil on price. It’s clear that the old question “is coal and oil cheaper than clean energy” is no longer just a theoretical debate—it’s a matter settled by real-world numbers.
Disclaimers: The geopolitical climate and U.S. policies are constantly evolving. Information is correct at time of writing, but may change as the situation develops. This article is for informational purposes only. The views presented in this article do not necessarily represent the views of 5 Digital Energy.