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The cost structures of fossil fuel plants and renewable energy (wind and solar) are fundamentally different. While fossil fuel plants have lower initial “sticker prices” but high ongoing expenses, wind and solar are the opposite: expensive to build but nearly free to run.

Direct Cost Comparison

Feature	Fossil Fuel (Gas/Coal)	Wind & Solar
Capital Costs (CAPEX)	Moderate (~$80/MWh for new gas)	High (~$210–$270/MWh for new build)
Fuel Costs	High (60%+ of total lifetime cost)	Zero (Fuel is free)
Maintenance (O&M)	High (~51% of LCOE for gas)	Very Low (4–14% of LCOE)
Lifetime Cost (LCOE)	$70–$120+ per MWh	$25–$40 per MWh

Capital Costs (CAPEX)

For renewables, capital costs represent 70% to 90% of the total lifetime expense.

Wind/Solar: You pay for almost everything on Day 1. This makes them highly sensitive to interest rates; if borrowing money is expensive, the cost of wind and solar rises sharply.
Fossil Fuels: Natural gas plants are relatively cheap to build. This low “entry fee” makes them attractive for investors who want to minimize upfront risk, even if long-term fuel costs are higher.

Fuel & Maintenance Costs (OPEX)

This is where renewables win on a long-term basis.

Zero Fuel Cost: Solar and wind have no fuel expenses. This protects operators from price volatility caused by geopolitics or supply shocks, which often cause natural gas and coal prices to spike.
Maintenance: Fossil fuel plants involve combustion, high heat, and moving parts (boilers, turbines, etc.), which require constant, expensive maintenance. Solar panels have no moving parts, and wind turbines, while mechanical, have significantly lower relative maintenance needs.

The “Existing Plant” Exception

While new wind and solar are cheaper than new fossil fuel plants, they often struggle to compete with already built (existing) gas plants.

Because an existing gas plant has already paid off its construction debt (capital cost), its only remaining costs are fuel and maintenance.
In some regions, the marginal cost of running an old gas plant ($24–$39/MWh) is still slightly lower than building a brand-new solar farm.

A Deeper Dive into the Cost of Coal

For a coal power plant, the cost structure is a balance between high upfront construction (capital) and high ongoing fuel and operations. Unlike wind or solar, which have 0% fuel costs, coal is heavily influenced by the price of the raw commodity and the labor required to keep a mechanical combustion system running.

The breakdown for a typical new conventional coal plant is roughly:

Cost Component	Percentage of Total (LCOE)	Key Factors
Capital Costs	~40% – 50%	Construction, permits, and financing (interest).
Fuel Costs	~30% – 40%	Raw coal price and transportation (rail/barge).
Maintenance & O&M	~15% – 25%	Labor, waste disposal (ash), and emissions scrubbing.

A breakdown of the cost of a coal plant …

Capital Cost (40–50%)

Coal plants are massive infrastructure projects. They require specialized boilers, turbines, and cooling systems.

Financing Intensity: Because they take 4–8 years to build, interest payments significantly inflate the capital portion.
Environmental Controls: Modern plants must include expensive scrubbers and filters for sulfur and mercury, which can add up to 30% to the base construction cost.

Fuel Cost (30–40%)

This is the most volatile part of the equation.

Commodity Price: If the price of thermal coal rises, the cost of electricity rises immediately.
Transportation: For plants far from mines, shipping coal via rail can account for half of the total fuel bill.
Fuel vs. Renewables: While wind and solar fuel costs are 0%, coal’s high fuel percentage means it can rarely be “turned off” profitably; the plant must run at high capacity to pay off the capital debt.

Maintenance & Operations (15–25%)

Coal plants are much more labor-intensive than gas or renewable plants.

Fixed O&M: Salaries for hundreds of workers, insurance, and regular safety inspections.
Variable O&M: The cost of chemicals for emissions control, water for cooling, and the physical wear and tear of burning coal.
Aging Plants: For older coal plants, maintenance costs often increase as parts fail more frequently, which is why many are being retired even if they are fully paid off.