Power Plant Construction: How Much Does It Cost? | ProEst (2023)

Published on February 22, 2021

Power Plant Construction: How Much Does It Cost? | ProEst (1)

Power plants are a key component of our critical infrastructure but must remain profitable for investors in order to continue operations. A fundamental factor affecting the profitability of power plants is the total construction cost to bring the facility online. Just as power plants themselves are complex facilities, power plant construction costs are inherently complex. Construction costs for new power plants vary widely depending on the type of electricity generation technology they are harnessing. Both fuel consuming and non-fuel consuming power generation facilities have substantially different construction costs.

(Video) Estimating Construction Costs for Nuclear Power Plants

Additionally, new construction costs for power plants are moderated by a number of other factors. Some of these factors are inherent to the power producing industry itself. For example, the regulatory environment, access to infrastructure, and the cost of the technology supporting the plant all influence the final construction cost. When discussing power plant construction costs, it is also important to understand how current dynamics in the construction industry as a whole can affect power plant construction costs. These include volatility in core material components for power plants, such as steel or metals, as well as an existing shortage of skilled labor within the construction industry. In this article, we’ll discuss power plant construction costs in the context of the moderating forces affecting costs both specific to power plants as well as forces affecting the construction industry in general.

Table of Contents

Power Plant Type vs. Cost

One of the core factors affecting construction costs for power generation facilities is the type of proposed facility. Construction costs can vary widely depending on whether they are coal-fired power plants or plants powered by natural gas, solar, wind, or nuclear generator facilities. For investors in power generation facilities, construction costs between these types of generation facilities is a critical consideration when assessing whether an investment will be profitable. Investors must also take into account other factors, like ongoing maintenance costs and future demand in order to determine a favorable rate of return. But central to any calculation is the capital cost required to bring a facility online. As such, a brief discussion of actual construction costs for different types of power plants is a helpful starting point before exploring other dynamics that influence power plant construction costs.

When analyzing power plant construction costs it is important to keep in mind that realized construction costs can be influenced by a number of dynamics. For example, access to resources that drive power production can have a large impact on construction costs. Resources like solar, wind, and geothermal are distributed unevenly, and the cost of accessing and developing these resources will increase over time. Early entrants into the market will capture the most cost-effective access to resources, while newer projects may have to pay significantly more for access to equivalent resources. The regulatory environment of the power plant location can have a large impact on the lead time of the construction project. For projects that have a heavy initial investment in construction this can lead to increased interest accrual and overall construction costs. For more information about the myriad of factors that can influence construction costs for power plants, refer to theCapital Cost Estimates for Utility Scale Electricity Generating Plantsreleased by the U.S. Energy Information Administration (EIA) in 2016.

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Power plant construction costs are presented as the cost in dollars per kilowatt. The information presented in this section is provided by the EIA. Specifically, we will be using power plant construction costs for power generation facilities constructed in 2015, foundhere. This information is the most current provided, but EIA is expected to release power plant construction costs for 2016 in July 2018. For those interested in power plant construction costs, publications by the EIA are one of the most valuable sources of information available. The data provided by the EIA is useful to illustrate the complex nature of power plant construction costs, and highlights the multitude of variables that can not only affect power plant construction costs but also ongoing profitability.


Power plants that relied on the wind as a renewable energy source added the most capacity to the power grid in 2015, without adding to much to fuel costs. Harnessing wind as an energy source has steadily been on the rise in the United States. In 2015, power plants harnessing wind energy added 8,064 megawatts (MW) of capacity. Contrast this with petroleum-based generation plants which added 45 MW of capacity and you can see the explosive growth of power plants reliant on wind energy. Wind power plants were constructed with an average cost of $1,661 per kilowatt of installed nameplate activity. This resulted in a total construction cost of $13,395,684 for 66 generators.

It is important to note that the construction of wind generators is heavily reliant on the current regulatory landscape and generation costs. To illustrate this, consider that power plants reliant on wind energy added less than 900 MW of capacity in 2013 according tothis reportby the EIA, in contrast to the addition of over 8,000 MW in 2015. The most influential reason for this was the expiration of a federal production tax credit at the end of 2012, which encouraged investors to move away from new construction of wind power generators until the tax credit was renewed in early 2013. Given the lag time in production, the increased capacity added in 2015 can be seen as a renewed investment once a more favorable regulatory environment was present.

Natural Gas

Power plants that utilize natural gas have been prime drivers for increased grid capacity in recent years, and 2015 was no exception. During 2015 a natural gas power plants added a total capacity of 6,549 MW. Natural gas power plant construction costs for the same year averaged $812/kw, for a total cost of $5,318,957 for 74 generators. There are three different types of technology that are utilized in natural gas power plants. Each different technology has a substantial impact on the total construction costs. The majority of capacity was added through combined cycle natural gas power plants (4,755 MW) and combustion turbine (1,553), while internal combustion engines accounted for only a small fraction of the capacity added (240). This doesn’t tell the complete story, however.

Combined cycle plants, defined as having at least one combustion turbine and one steam turbine, operate at much higher efficiency levels than the other types. While this lowers operating costs over the long-term, capital costs for construction are also higher. Combustion turbine natural gas power plants are less efficient than combined cycle, which results in higher operational costs, but are also less expensive to build. Both internal combustion engine and combustion turbine power generators have the added advantage of being able to be built more quickly than combined cycle power plants. This has led to their use in situations where short-term capacity increases are needed to meet rising demand. Additionally, although combustion turbine plants are less efficient, they tend to only be run at peak times in order to meet demand. In contrast to this, combined cycle plants tend to be used to meet baseline demand loads due to their higher efficiency and lower operating costs.


Solar power plant construction cost, like those for natural gas, is also highly dependent on the underlying technology utilized in the plant. Additionally, the capacity generated by solar power plants is also dependent on the technology utilized. Because of this, the intersection between construction costs and the productive capacity of solar power plants is a central consideration for investors. The average construction cost for all types of solar photovoltaic (PV) power plants was $2,921/kw for a total capacity increase of 3,192 MW. Total construction costs for solar PV plants was $9,324,095 for 386 total generators. These numbers demonstrate that solar plants on average yield less capacity increases per generator when compared to both natural gas and wind. Production levels aren’t static across different types of solar PV installations.

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A key difference is between fixed-tilt and axis-based tracking installations. Axis-based tracking systems are more expensive to install, but result in a higher production capacity than fixed tilt, which may help offset ongoing operational costs. Another factor to consider is the type of solar PV installation. The two primary types present on the market are crystalline silicon and thin-film CdTe. These different types have advantages and disadvantages. Thin-film technology is newer, and thin-film plants have a significantly increased average capacity (74 MW vs 7 MW) over crystalline silicon plants. Both plant types are similar in price to construction. For example, for axis-based tracking installations crystalline silicone plants averaged $2,920/kw in cost versus thin-film plants which averaged $3,117/kw. Crystalline silicon installations of both fixed and axis-tilt types vastly outnumbered thin-film installations during 2015, showing a clear market preference for crystalline silicon solar power plants for 2015.


Power plants harnessing nuclear energy remain a core component of our energy infrastructure despite the fact that few nuclear power plants have been built in recent years. In fact, the most recent nuclear power plant to finish construction was the Watts Bar Unit 2 plant completed in 2016. This plant was finished after decades of delays, and was brought online nearly 20 years after the previous nuclear power plant was finished in the United States in 1996, which was the Watts Bar Unit 1. Because of the lack of new construction for nuclear plants there aren’t completely accurate or up-to-date nuclear power plant construction costs available. Aneconomic outlookreleased by the EIA in 2018 proposed that nuclear power plants begun in 2016 would have a base overnight cost of $5,148, not accounting for fluctuations that may occur during the interim. One key thing to note about the nuclear industry and nuclear powerplants is the significant time required to complete construction. According to the EIA, the soonest a nuclear reactor and power plant could be brought online if construction was begun in 2016 is 2022. This makes nuclear power plant construction more vulnerable to cost overages if construction costs as a whole continue to rise as they have.

Power Plant Construction: How Much Does It Cost? | ProEst (2)

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(Video) Estimating Construction Costs for Nuclear Power Plants

Labor and Material Costs

Labor and materials are two of the core drivers of power plant construction costs, and both are leading to rising construction costs each year across all industries. Keeping abreast of fluctuations for both labor and materials is important when assessing total construction costs for power plants. Power plant construction is generally an extended undertaking. Projects can take between 1 and 6 years for completion at a minimum, with some extending considerably further. The EIA rightlypoints outthat differences between the projected and real cost of materials and construction over the course of the project are important to consider and can have a substantial impact on construction costs.

Construction costs in general are rising, but two of the primary drivers of this is material and labor burden. Material costs have risen dramatically in recent months, and may continue to rise should current policy stances be maintained. In particular, tariffs on foreign imports of key metals, including steel, aluminum, and iron, as well as lumber from Canada, are producing dramatic fluctuations in material costs. Real material costs arecurrently uproughly 10% over July 2017. This trend doesn’t appear to be diminishing for the foreseeable future. Steel is especially important for power plant constructions, so continued tariffs on imported steel could result in substantial cost increased for power plant construction of all types.

Increased labor costs in the construction industry are also contributing to rising construction costs. Increased labor costs are being driven by a shortage of skilled labor stemming from the low turnout of millennials in construction trades and a dramatic shrinking of the construction labor force during and post-recession. Although many construction firms are integrating career pathway programs to entice more millennials into trade industries, it will take time to fully see the effect of these efforts. This labor shortage is seen most vividly in urban areas with stiff competition for skilled labor exists. For power plant construction projects near urban centers, access to skilled labor may be limited and may come at a premium.

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How much does it cost to power a power plant? ›

Basic economics of power generation, transmission and distribution
TechnologyCapital Cost ($/kW)
Coal gasification combined-cycle (IGCC)$1,000 — $1,500
Natural gas combined-cycle$600 — $1,200
Wind turbine (includes offshore wind)$1,200 — $5,000
Nuclear$1,200 — $5,000
4 more rows

How much does it take to build a power plant? ›

Natural gas power plant construction costs for the same year averaged $812/kw, for a total cost of $5,318,957 for 74 generators. There are three different types of technology that are utilized in natural gas power plants. Each different technology has a substantial impact on the total construction costs.

How do you calculate the fixed cost of a power plant? ›

Fixed costs are the cost of equipment, land, financing, project management, grid connection, and construction of the power plant. These are usually expressed per unit of installed capacity (per kW or per MW).

Which power plant has minimum cost? ›

Hydroelectric power plants do not need any fuel whereas thermal and nuclear power plants require fuel. Hence, the cost of fuel transportation is nil for hydroelectric power plants. Q.

How much does it cost to construct a coal power plant? ›

In fact, the estimated costs of building new coal plants have reached $3,500 per kW, without financing costs, and are still expected to increase further. This would mean a cost of well over $2 billion for a new 600 MW coal plant when financing costs are included.

Why are power plants so expensive? ›

This is because nuclear power plants are technically complex and must satisfy strict licensing and design requirements. The design and construction of a new nuclear power plant requires many highly qualified specialists and often takes many years, compounding financing costs, which can become significant.

How much land is needed for a power plant? ›

Energy Plant Land Use

39 According to the Natural Gas Supply Association, the average natural gas plant requires between 20 and 40 acres of land.

How many people does it take to build a power plant? ›

Quick Facts on Nuclear Industry Jobs

Each nuclear power plant employs 500 to 800 workers. Nuclear power plants can operate out to 80 years or more, so a nuclear power plant can provide jobs for multiple generations of workers. Building a nuclear power reactor employs up to 7,000 workers at peak construction.

What is capital cost of power plants? ›

The capital cost includes the cost of the plant, land acquisition (unless a rent is paid, in which case this is a running cost), grid connection (although in some European states, the utility has borne the cost), and initial financing costs (not repayment costs). 2.

How do you calculate total plant cost? ›

In its simplest form, the total purchased price of all of the equipment included in the plant can be added and then multiplied by a single factor to estimate the total plant cost.

How do you calculate power plant? ›

The simple calculation to achieve the theoritical maximum answer is to multiply the capacity of the plant in megawatts (MW) by 8,760 (the number of hours in a year and then by 1,000 (the number of kilowatt hours (kWh) in a megawatt hour (MWh).

What is the formula of power plant? ›

So, efficiency = Useful energy output X 100 / Total energy input.

Which power plant has highest cost? ›

Hence, according to the question, Nuclear Power Plant has the highest initial cost and minimum cost of fuel transportation.

What is the cheapest way to make power? ›

Wind: The cheapest of all renewable energy sources and the least polluting of them all, wind power is feasible only in locations with good wind speed. As wind turbines can share land space, it is a good choice for farms and ranches.

Which plant has highest maintenance cost? ›

Correct answer: 1.

A nuclear power plant requires highly skilled and qualified personnel for maintenance since the auxiliaries and all other parts are very complex in design. There a Nuclear power plant has the highest maintenance costs as compared to other power plants.

How long does it take to build a power plant? ›

According to the Nuclear Energy Agency (NEA), it takes about five to seven years to build a large nuclear unit. Once the nuclear power plant is built, it is tested by the electric company to see if it properly runs, and if the power plant passes that test, it is ready to be used.

How much does it cost to build a thermal power plant? ›

Total investments in renewables by India in 2016: Rs 64,990 crore ($9.7 billion) Cost per MW: Rs 6 crore Cost of 1,000 MW coal fired plant: 6 x 1000 = Rs 6,000 crore Coal fired plants that can be built= Rs 64,990 crore/Rs 6,000 crore= 10.83 (rounded off to 11)**.

Do power plants make money? ›

They don't profit. But with capital expenses—that is, physical infrastructure, like poles and wires—utilities can collect the money they invested plus an additional percentage they keep as profit.

What is the problem with most power plants? ›

They emit harmful pollutants, including mercury, non-mercury metallic toxics, acid gases, and organic air toxics such as dioxin. Power plants are currently the dominant emitters of mercury (50 percent), acid gases (over 75 percent) and many toxic metals (20-60 percent) in the United States (see graphic at right).

How much does a power plant produce per day? ›

The amount of electricity that a power plant generates over a period of time depends on the amount of time it operates at a specific capacity. For example, if the R. E. Ginna reactor operates at 582 MW capacity for 24 hours, it will generate 13,968 megawatthours (MWh).

How big is the average power plant? ›

Since 2014, the average size of a natural gas-fired combined-cycle power block has increased significantly. The average combined-cycle power block installed between 2002 and 2014 was about 500 megawatts (MW). After 2014, power block capacity increased, reaching an average of 820 MW in 2017.

How much do power plants make a year? ›

Power plant operator salary by state
State NameAverage Salary
North Dakota$98,290
New York$98,290
46 more rows

How much would it cost to build enough solar panels to power the world? ›

To achieve 100 percent renewable energy over the next 10 years, the analysis finds that there would first have to be a massive buildout of wind and solar capacity, costing $1.5 trillion.

How many houses can a power plant? ›

For conventional generators, such as a coal plant, a megawatt of capacity will produce electricity that equates to about the same amount of electricity consumed by 400 to 900 homes in a year.

Can you build a power plant? ›

It's possible to build any type of renewable energy sources like solar panels, wind turbines, and even hydroelectric power plants. Although, it does take some basic knowledge of hydropower and the right supply of water at home to make it work.

How do we calculate cost price? ›

For example, Cost price = Selling price − profit ( when selling price and profit is given ) Cost price = Selling price + loss ( when selling price and loss is given ) Cost price =100×Selling Price100+Profit%( when selling price and profit % is given )

How do you calculate total construction cost? ›

Cost of construction = area of plot x construction rate per sq ft. To arrive at the construction rate per square foot, you must include the following: Construction material: Cement, steel, sand, gravel, finishing, color, tiles, bricks, fittings, windows, doors, plumbing, sanitary, and electrical.

How much is the total cost? ›

Total cost (TC) in the simplest terms is all the costs incurred in producing something or engaging in an activity. In economics, total cost is made up of variable costs + fixed costs. Variable costs (VC) are costs that change based on how many goods you buy or how much of a service you use.

What are 4 types of power plants? ›

The major types generating electric power today are shown below.
  • Figure 2. Fossil fuel power plant. Figure 3. Hydroelectric power plant.
  • Figure 4. Solar thermal power plant. Figure 5. Nuclear power plant.
  • Figure 6. Geothermal power plant. Figure 7. Wind power towers.

How is power plant efficiency calculated? ›

To express the efficiency of a generator or power plant as a percentage, divide the equivalent Btu content of a kWh of electricity (3,412 Btu) by the heat rate. For example, if the heat rate is 10,500 Btu, the efficiency is 33%. If the heat rate is 7,500 Btu, the efficiency is 45%.

What are the 3 formula for power? ›

To calculate the power calculation formula, we have to remember three equations. They are: P (watts) = V (volts) x I (amps) P (watts) = I2 (amps) x R (Ω)

What are the 3 power plants? ›

Nuclear, coal and wind are just three types of energy that are used to generate electricity in power plants across the world.

Which chemical is used in power plant? ›

Chemicals Used in Power Plants

Caustic soda (lye) — Neutralization, pH adjustment, regenerating ion exchangers. Sulfuric acid — Decarbonization, pH adjustment. Hydrochloric acid — Decarbonization, pH adjustment. Ferric chloride — Flocculation, wastewater treatment.

What is the best power plant? ›

Nuclear Has The Highest Capacity Factor

This basically means nuclear power plants are producing maximum power more than 92% of the time during the year. That's about nearly 2 times more as natural gas and coal units, and almost 3 times or more reliable than wind and solar plants.

How can I get power without electricity? ›

Renewable energy sources are an excellent way to do this. Install solar panels to harness the power of the sun, build wind turbines, or power your home through a hydropower system. You may also consider installing a generator so you can power your own electric items.

What are plant costs? ›

Plant Costs means all costs and expenses of designing, developing, siting, permitting, constructing, equipping and testing the applicable plant and for all mining and other equipment purchased by the entity that owns the applicable Plant to be used in supplying such Plant with Products.

How much does it cost to maintain a plant? ›

It costs between $6 to $150 for the maintenance of houseplants. However, there is no one-size-fits-all answer regarding the cost of maintaining houseplants because each plant has different water, light, temperature, humidity, and soil type requirements.

What is operating cost of a plant? ›

3 Operating Cost. Operating cost covers all expenditure incurred after plant commissioning and during actual operation. These items include labor, energy, chemical, spare parts, and miscellaneous.

How much does a 1000 MW Nuclear Power Plant cost? ›

This year, the Westinghouse AP1000, a 1,000 MW nuclear power plant, costs $7 billion, operating at a capacity factor of 90% for the 8,766 hours each year over its 60-year life, and will produce 473 billion kWhrs, more or less.

What is the cost of 100 MW solar power plant? ›

Solar Power Plant, For Commercial, Capacity: 1-100Mw at Rs 32970/kilowatt in Ahmedabad.

How much does it cost to build a nuclear power plant 2022? ›

Companies that are planning new nuclear units are currently indicating that the total costs (including escalation and financing costs) will be in the range of $5,500/kW to $8,100/kW or between $6 billion and $9 billion for each 1,100 MW plant.

Which power plant has highest capital cost? ›

Hence, according to the question, Nuclear Power Plant has the highest initial cost and minimum cost of fuel transportation.

Is nuclear power expensive or cheap? ›

Nuclear power plants are expensive to build but relatively cheap to run. In many places, nuclear energy is competitive with fossil fuels as a means of electricity generation. Waste disposal and decommissioning costs are usually fully included in the operating costs.

What problems do we get from power plants? ›

Power plants emit air pollutants and water vapor as fog into the atmosphere that could affect the growth and survival of certain vegetation communities. Some pollutants are toxins or promote diseases that damage or kill plants.

How much does a power plant owner make? ›

How much does a Power Plant Operator I make in the United States? The average Power Plant Operator I salary in the United States is $67,960 as of October 27, 2022, but the range typically falls between $56,914 and $83,580.

How many hours do power plants work? ›

Because electricity is provided around the clock, operators, distributors, and dispatchers usually work rotating 8- or 12-hour shifts. Work on rotating shifts can be stressful and tiring because of the constant changes in living and sleeping patterns.

How much does a 10000 watt solar system cost? ›

How much does an average 10kW solar system cost? As of January 2022, a 10kW solar energy system will cost about $30,000 before incentives, based on the average cost of solar in the U.S. When you take the federal tax credit into account, that price drops to about $21,000.

What is the cost of 1 MW solar plant? ›

1MW Solar Plant Cost. The cost of solar power systems has changed recently and the government is promoting green energy in many ways. You can now install 1MW solar power plant by investing INR 4-5 crore. Thereafter, you can supply the electricity to the government for more than 25 years.

How much does a 2000 kW solar system cost? ›

How Much Does A 2000 kWh Solar System Cost? The average cost for a 2000 kWh solar system is $26,000 ($0.0362/kWh). This price considers installation and a 26% tax rebate. This figure is 4 times lower than the US electricity price ($0.15/kWh).


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