Gas turbines and combined cycle: Unit economics
Why fuel is often the biggest cost, and turbine prices soar
What this tab covers What it costs to move a unit of energy this way: capital and operating costs, tariffs, utilisation and how it compares with the alternatives.Combined-cycle power costs USD 48-109 per MWh in Lazard's 2025 US analysis, and fuel is often the largest single cost. Peakers are cheap to build but run few hours, so each MWh costs USD 149-251. Turbine shortages are pushing new-build costs up sharply.
Key costs
| Measure | Value | Note |
|---|---|---|
| LCOE, combined cycle (unsubsidised) | 48-109 USD/MWh (2025)5 | Capacity factor 30-90%, gas at USD 3.45 per million Btu, 30-year life. |
| LCOE, gas peaker (unsubsidised) | 149-251 USD/MWh (2025)5 | Capacity factor 10-15%. |
| Capital cost, combined cycle | 1,200-1,600; recent quotes 2,400-2,600 USD/kW (2025)51422 | The higher figures are market quotes for plants due after 2028. EIA's AEO2026 reference plants: USD 1,032-1,086/kW (2025 dollars) for 627-1,227 MW. Oglethorpe's 1,425 MW Smarr plant is budgeted at about USD 2 billion, about USD 1,400/kW (calculated). |
| Capital cost, peaker | 1,150-1,450 USD/kW (2025)514 | EIA AEO2026 reference costs: USD 1,158/kW for a 419 MW industrial frame, USD 2,275/kW for a 211 MW aeroderivative (2025 dollars). |
| Gas turbine price (analyst estimates) | about 790 heavy-duty; 950 HA-class; 1,800 aeroderivative USD/kW (2026)6 | BNP Paribas estimates reported by Utility Dive. |
| Fuel cost per MWh | about 22 (combined cycle); about 37 (peaker) USD/MWh (calculated)5 | Heat rates of about 6,500 and 10,700 Btu/kWh times USD 3.45 per million Btu. |
| US combined-cycle capacity factor | 57% fleet (2022); 64% for units built 2010-2022 share of hours4 | Newer, more efficient units are dispatched first. |
Where the money goes
| Item | Share or amount |
|---|---|
| Fuel | about 42% of cost at USD 1,400/kW and 60% utilisation; about 31% at USD 2,500/kW (calculated)5 |
| Capital repayment | about 44-59% (calculated, same cases)5 |
| Operations and maintenance | about 10-14% (calculated, same cases)5 |
| Gas turbine within plant capital | about 38% (calculated: about USD 950/kW turbine price over a USD 2,500/kW plant)56 |
Worked example (calculated from Lazard 2025 inputs): a combined-cycle plant at USD 1,400 per kW, financed at an assumed 8% over 30 years (close to Lazard's 7.7% after-tax WACC) (capital recovery factor 0.0888), needs about USD 124 per kW a year for capital plus about USD 18 of fixed upkeep. At 60% utilisation each kW makes 5,256 kWh, so fixed costs are about USD 27 per MWh. Fuel adds about USD 22 and variable upkeep about USD 4, totalling about USD 53 per MWh. At today's quoted USD 2,500 per kW the total rises to about USD 72. A peaker at USD 1,300 per kW running 12% of the year costs about USD 164 per MWh, because its fixed costs are spread over few hours.
Sources
- Natural gas combined-cycle power plants increased utilization with improved technology US Energy Information Administration, Today in Energy, 2023
- Lazard's Levelized Cost of Energy+ (LCOE+), June 2025 Lazard, 2025
- GE Vernova gas turbine backlog climbs to 116 GW Utility Dive, 2026
- Assumptions to the Annual Energy Outlook 2026: Electricity Market Module (Table 3, cost and performance of new generating technologies) US Energy Information Administration, 2026
- Oglethorpe Power selects Kiewit as EPC for new combined cycle plant Power Engineering, 2026