Solar a safer financial proposition than nuclear or hydrogen

A new study from the Boston University Institute for Global Sustainability has highlighted the financial risks associated with building energy systems, having found that more than 60% of energy infrastructure projects run over budget 

This study draws on a dataset covering 662 projects across 83 countries from 1936 to 2024, representing over $1.35 trillion in investment and more than 400 gigawatts of capacity.

They found that over 60% of those projects went over budget, with the larger projects – capacities above 1,561 megawatts – being particularly expensive to complete. The total construction costs exceeded initial budgets by $546 billion.

Since 1976, there has been an overall improvement in completing projects closer to budget but larger this has been driven by the solar market, with solar energy projects demonstrating a decline in cost escalation, something the team believe is due to maturing technologies, which are benefitting from learning effects and improved efficiency.

On the other hand, projects involving nuclear and fossil thermal energy showed increasing cost overruns over time. Nuclear power plants can be expected to cost twice as much as originally suggested, shooting an average of $1.56 billion over budget.

Of particular interest are the findings for new technologies such as hydrogen, and carbon capture and storage, which were found to have particularly high time and cost overruns. The researchers believe this raise questions about the scalability and feasibility of deploying these emerging technologies quickly enough to meet climate targets.

Benjamin Sovacool, lead and first author of the study and director of IGS said: ‘Worryingly, these findings raise a legitimate red flag concerning efforts to substantially push forward a hydrogen economy.’

Predictably, time delays were also linked to cost: projects delayed by more than 87.5% saw significant jumps in cost overruns. This suggests that managing construction timelines is as critical as managing budgets, especially for large-scale or innovative technologies. 

Hanee Ryu, second and corresponding author and a visiting researcher at IGS said: ‘I’m particularly struck by our findings on the diseconomies of scale, with projects exceeding 1,561 megawatts in capacity demonstrating significantly higher risk of cost escalation. This suggests that we may need to reconsider our approach to large-scale energy infrastructure planning, especially as we commit trillions to global decarbonisation efforts.’