"Thus, wind power has reduced the cost of electricity."
Umm - wind power has reduced the wholesale price of electricity. But the cost of electricity includes all the subsidies that went into building the renewable facilities, as well as the production credits that are paid for every kilowatt hour generated. These costs don't show up in the wholesale price, but they are still paid.
You have quoted the Princeton Net Zero America project and the Berkeley 2035 study as supporting the cost competitiveness of renewable energy. But both studies explicitly rely on continued subsidies and mandates for use of renewables, along with extremely low capital costs, to keep wholesale costs "comparable" to current costs.
You say there's "No evidence that renewables increase cost of electricity", but you use a very peculiar approach to look for the evidence. Why not simply look at the amount spent to subsidize renewables, and the economics of renewable plants without the subsidies? Why not include the cost of maintaining a system with full generating capacity, to cover days when the wind doesn't blow?
"You cannot look at the pervasive dishonesty about the cost of renewables by itself. Instead, you have to see it as part of a bigger effort to rig the market." You could look in the mirror. If you really didn't think about the issues I raised, you should do more research before you repeat other people's talking points. If you did think about them, you should realize you undermine your credibility by pretending these issues don't exist.
Your statement is incorrect. Those studies DO NOT rely on subsidies. Certainly there are subsidies on both sides (yes, massive subsidies for fossil fuels, too). People have looked at this and there's no reason to think that they change this picture. See page 9 of https://www.lazard.com/media/xemfey0k/lazards-lcoeplus-june-2024-_vf.pdf
"But without policy interventions, zero carbon electricity sources would only comprise 53 percent of our nation’s electricity in 2035." (I do not endorse the claim that zero-carbon electricity sources would comprise 53 percent of US generation in 2035 with no change to current policies, but I quote them on their own terms.)
They then list 16 specific policy recommendations, one of which is a statutory requirement for zero-emissions generation, two of which are tax credits for clean energy generation, and one is "greatly increased" subsidized financing.
The Lazard study is one way of examining the cost of electricity. It is intended to measure the cost of producing a small amount of electricity, assuming the electricity can be used as delivered. It doesn't address the cost of maintaining a delivery system.
This should address short-term load-balancing - currently, Europe sees many days with negative prices because there is more renewable generation than needed, but producers must still be paid.
It should also address long-term energy storage; PV solar obviously would need to be backed up to cover night-time requirements. Wind would also need to be backed up to cover windless days. Storage requirements could be mitigated by building excess generation capacity, so that current demand can be met even if renewable conditions are less than ideal.
I think it's worth mentioning the only "all-renewable" system I've heard of: El Hierro, one of the Canary Islands. This island has a population of 10,000, and built a wind plus pumped-hydro storage system intended to cover all their electricity requirements. It has a location as close to optimal as I've heard of. The system went online in 2015. It reportedly cost 54 million Euros, or 5,400 Euros per man, woman and child. Neglecting operating costs, which are certainly great than zero, this would imply a cost of electricity of 270-540 Euros per resident, depending on the cost of capital you assume. But the system has only provided about half the island's electricity requirements, so the fossil-fueled system must be maintained and operated.
I don't deny that renewables can be cost effective for some applications. Obviously, solar PV is viable for many space applications. It's also been used to power emergency road-side phones on public highways for many years; I assume there were no renewable subsidies involved for this. But claiming that LCOE demonstrates something about utility-scale generation is at best misleading. Among all the boosters and promoters of renewable generation, I almost never see anyone with any background in operating a power system. Certainly, some utility executives have said that they plan to build only renewable generation capacity, but this is in a context where state and federal regulators require renewable generation.
Subsidies might certainly be required to get a 90% clean grid by 2035. After all, why would we switch to clean energy if we're paying the same thing as our dirty fossil fuel grid. Nevertheless, subsidies are not required to get cost parity between a 90% clean grid and a fossil-fuel powered grid. You claims otherwise are incorrect.
As I wrote in the post: This discussion (that renewables save money) applies to grids that have significant fossil fuel generation in it, which is most grids. As grids become majority renewables, the economics and the behavior of the electricity market shift, as I explained here: https://www.theclimatebrink.com/p/is-renewable-energy-cheaper-than
I've read your explanation, but I don't see how it can possibly be true. In the past, the studies that have been ballyhooed as proving, once and for all, that renewables were cost effective compared to conventional generation have always included "weasel words" like "we assume that governmental organizations will continue to provide capital at preferential rates." Once you pick at the assumptions, the conclusions fall apart.
More recently, the reports don't include the weasel words, but also don't explicitly describe assumptions and methods. Maybe I'm being unfairly harsh, but I assume this means the weasel words are hidden, not that the fundamentals have changed.
Furthermore, Germany, Spain, the UK, and California generate large amounts of electricity, but significantly less than 50% of the total from wind and solar, yet they all see very high retail electricity prices coupled with significant days with negative wholesale prices. The high retail prices would seem to give the lie to the claim that non-dispatchable electricity lowers generation costs. The negative wholesale prices reflect the fact that much of the electricity generated is at times when it is not needed, and is therefore wasted.
This situation means that the LCOE calculations are not meaningful at levels of renewable generation currently seen in these countries.
Lastly, the Lazard LCOE study seems highly suspect, at least regarding treatment of capital cost. From page 13, increasing cost of capital by 138% increases cost of onshore wind by 48% and cost of utility PV by 61%. As you noted, the marginal cost of wind or solar generation is basically zero, meaning the cost is essentially all capital. Large increases in cost of capital should mean much larger increases in LCOE. I've written to Lazard to ask about this issue; I'll let you know if they respond.
At the personal pocketbook level, here is my example. Solar added to house with less than ideal sun coverage due to trees, even in January, has generated over half the electricity we use. That’s with an all electric house and two EVs and a well pump. In the 6 months of better sun we generate more than we use and have our own battery storage for overnight. If we cut trees around the house that would be true year round.
Another example, my sister in law lost power for three weeks as a result of Helene. Full solar power on house meant they cooked for neighbors, did laundry, offered showers and kept EV’s charged.
Did that cut the price of electricity? It did for my checkbook.
Yes, but what’s the payback period of the PV installation? I ran the numbers and it was about the useful age of the installation. So not worth doing then…
Sorry, this is misleading because you are just looking at the wholesale costs and not total system costs. It might work differently in the US, but in the UK offshore wind for instance may bid £1/MWh into the market, get paid the market price for that period but then receive a massive subsidy on top to the Contract for Difference (CfD) strike price.
Last year in 2024, the average cost on our bills of CfD-funded offshore wind was £154/MWh. £86/MWh was paid in subsidy and £67/MWh was the market price (set by gas):
In total we pay over £11bn in renewables subsidies each year for these "cheap" renewables across Renewables Obligations, CfDs and Feed-in-Tariffs. If renewables really were cheap they would not need subsidies.
Moreover, you are missing the extra costs of balancing the grid (£2.5bn) to cope with the volatility of wind generation, the backup costs that in the UK are paid through the capacity market (£1bn). In addition, because offshore wind farms are remote and diffuse, we need to pay massive extra sums to extend the grid to connect those assets - the National Grid has announced £112bn of spending out to 2035.
On the correlation between price and renewable penetration it definitely appears that windy states have benefitted from wind power development. It will be interesting to see if solar can do the same for sunny states. And what will be the fate for states that are not terribly windy or sunny? I imagine they’ll get to a low price renewable future eventually but it’s tougher to justify at scale deployment in non-ideal places without subsidies…
Yes. Wind and solar reduce wholesale power prices by oversupplying the market with subsidized, zero marginal cost power. However, the retail power prices rise, which is what consumers actually pay, and the retail prices include the hidden costs of wind and solar like the transmission lines, backup generation etc.
It’s also interesting to note that you discuss the mechanism by which wind and solar force other generators out of the market but you don’t explain what happens when those resources are needed and wind and solar don’t show up to work.
Your point about backup misunderstands how energy markets actually operate, as explained in the post.
The question about transmission is an interesting one. The CREZ lines cost less than $10 billion, and renewable energy has saved Texans much more than that. Thus, I think the argument that this makes solar and wind more expensive is not supported by data.
You also asked the question about what happens if solar and wind push too much dispatchable power out of the market. That’s a legitimate issue when renewable energy penetration dominates the energy market, but that’s certainly not a problem in any market today.
I already touched on that sir. The retail rate includes a lot more than just the wholesale power price. As the wind and solar grow their market share the integration costs show up in the retail price. In ERCOT the grid is already close to being undersupplied during high demand periods if wind and solar don’t show up. That’s why TX is subsidizing gas plants and putting more money into the ancillary services market. It’s effectively the same the same thing California does with its reliability must run payments.
Is there a quantification of these integration costs? If they’re so large, I’d love to see the data.
Yes, the Texas grid is close to limits during high demand. That’s not a problem with solar and wind, that’s a consequence of how the market is designed.
But in your post you said the market provides the backup power needed for wind and solar. Either the “merit order” market works or it doesn’t. Which is it?
Merit order IS the market design. The incentives are wrong. If you think about it logically, the incentive is to literally NEVER need to displace a higher cost producer. As long as gas fired generation has to be turned on, consumers are forced to pay that higher rate. It is fundamentally a rent seeking market design.
I am thinking about it logically and I don't see any logic in your claim. Of course high-cost producers are being displaced, that's why coal is getting pushed out the market.
The article’s analysis is superficial and incomplete because it:
1. Fails to include subsidies and taxpayer-funded incentives.
2. Ignores the capital and operational costs of necessary backup systems.
3. Overlooks the hidden costs of grid infrastructure upgrades and balancing mechanisms.
4. Pretends that renewables are a simple, low-cost bonus when in fact, they represent a duplicated energy system—one unreliable system layered on top of another.
In the end, the consumer pays for everything: the renewables, the backup, the subsidies, the grid upgrades, and the inefficiencies. Claiming that renewables “cut costs” without this full accounting is, frankly, misleading.
I look at the UK grid, which is chock full of wind power, and all I see are rising bills.
I speak for myself. I have solar on five buildings. It has not been a good investment. Heavy snow destroyed one 30 kw array and caused hundreds of roof leaks. I rebuilt the array but the roof kept leaking. Recently I took the array down , put a new metal roof on and cut my losses. What a hassle.
Sunlight is free. Solar equipment and roofs are far from free.
While I totally agree with the thesis of this article (and great examples explaining the facts), I decided to do a search on “Green Premium” and was surprised to see a lot of hits. Some of course represent fossil fuel interests, and many others are about topics other than power generation (e.g. materials manufacturing and agricultural products). The term “green premium” seems to have been coined by Bill Gates at least five years ago, and as you show, it is obsolete. But I suppose many interests still want to keep it in “meme” status.
The thing to remember is that the price of renewable energy has dropped a huge amount in the last decade—solar has dropped 90%, for example. So, if you go back a decade, there was a green premium because renewable energy WAS more expensive. But today, there is none.
The example you have given is adding a small amount of wind power to a grid that already has excess capacity and, in that case, it works. You have 130 MW of fossil fuel capacity and a demand of only 100 MW. Now suppose we want to power electric vehicles, AI centres, etc. and the demand on our grid is anticipated to be 160 MW. The 30 MW of wind power doesn’t help us to do this because on some days it will be zero. Even if we had 60 MW of wind power we would be in the same situation. To meet that demand we would have to build a new 30 MW fossil fuel generator. Unless there is someway of storing the wind energy or importing power from somewhere else, we cannot add wind power without back up fossil fuel. Now in TX you would have solar as well but in many northern countries solar is not useful in January.
This discussion applies to grids that have significant fossil fuel generation in it, which is most grids (e.g., Texas is 30% renewable, 60% fossil fuel, 10% other). The conclusion is that renewable energy is saving us money *right now*.
That’s my point. It will not be possible to build a grid that is completely wind/solar - your article referred to above suggests we might get to 57% but that depends a lot on the site and the statistics for wind/solar at that location. In any case we STILL need backup for all of that wind/solar unless we have economical storage. And we would like that backup to be zero carbon. That can only be provided by nuclear and who is going to build a reactor that operates a fraction of the time? Where I live (Canada) solar is not very useful and it be better to forget wind/solar and just build nuclear. Plus we won’t have to find some place to put all those turbines and solar farms.
See https://www.2035report.com/electricity/ for an analysis of how we get to 90% clean electrical grid while paying the same as we do today. the last 10% may be expensive, no one really knows.
From page 15 of the report: "In the No New Policy case, however, the grid mix is determined by least-cost capacity-expansion modeling based on the current paradigm for electricity-market costs". In other words, the least-cost grid in 2035 is mostly fossil-powered.
"The 90% Clean case assumes implementation of policies that promote large- scale renewable energy adoption and yield net societal benefits compared with the business-as-usual approach assumed under the No New Policy case. As detailed in Sections 3.3 and 3.6, the nominal electricity cost increases under the 90% Clean case are more than offset by the societal benefits provided by that case." In other words, they rely on non-economic benefit to justify higher energy costs.
From page 21: "Wholesale electricity (generation plus incremental transmission) costs are lower in 2035 under the 90% Clean case than they are today (Figure 9)." But wholesale costs depend on continued and expanded subsidies, tax credits, subsidized debt financing, and other financial and legal support for renewable generation. (From the Policy Summary for Congress, https://energyinnovation.org/wp-content/uploads/2020/06/90-Clean-By-2035-Policy-For-Congress_June-2020.pdf)
I'm sorry, but what you're saying is wrong. In its core cost comparisons showing that the 90% clean grid would be comparable/cheaper than today's grid, the report looks at actual underlying costs without counting the effects of subsidies like tax credits.
What is your basis for this claim? Are you claiming that the report assumes current subsidy programs would be terminated? Even the No New Policy case must assume that current policies continue, and current policies include multiple tax credits for zero carbon electricity and subsidized financing from the Department of Energy.
Brian, i was reading about the UK wind farms that require CfD and FiT to make it worthwhile to turn them on. They also receive millions in constraint payments (low wind and too high wind) and the full capex costs of connection to the grid, resistance losses, stabilization, grid hardening and VAR control are not counted. These are paid by consumers under the transmission expenses. Your analysis seems to mirror this. Me thinks Andrew is missing some costs, if they only had $50/mw in their revenue stream they would not be there.
Yes, agreed. The back-up is so large and costly (and usually just the grid youre trying to replace) that why not just find a low co2 thermal source? Not too many of them technologies
Great blog! It clearly explains how switching to renewable energy not only helps the environment but also cuts long-term energy costs. A smart move for both your wallet and the planet!
Another argument is that while renewables bring down the wholesale price, the total price increases, because renewable energy requires more grid upgrades (higher grid fees) and more grid services (balancing, frequency etc). Is this backed up by data?
Why split hairs about solar and wind, and whether or not they are cost saving, but instead embrace the most efficient means of energy production, nuclear.
Silicon refinement for solar panels emits tons of CO2:
Nuclear is great if you want energy prices that will bankrupt our economy. As far as the argument of CO2 released from solar panels, that’s a red herring. If you have a grid that is entirely renewable, then you can make solar panels with zero emissions.
France has been heavy(80+%) on nuclear for decades and definitely not bankrupt. Germany, on the other hand, goes heavy on renewables for only a few years and is already backing out. Dunkelflaute.
How is silicon refined if not by the Berzelius method? It’s a coal consuming, energy hog, which is why PV ranks so poorly in EROI.
See table under section: EROI and payback periods of some types of power plants
"Thus, wind power has reduced the cost of electricity."
Umm - wind power has reduced the wholesale price of electricity. But the cost of electricity includes all the subsidies that went into building the renewable facilities, as well as the production credits that are paid for every kilowatt hour generated. These costs don't show up in the wholesale price, but they are still paid.
You have quoted the Princeton Net Zero America project and the Berkeley 2035 study as supporting the cost competitiveness of renewable energy. But both studies explicitly rely on continued subsidies and mandates for use of renewables, along with extremely low capital costs, to keep wholesale costs "comparable" to current costs.
You say there's "No evidence that renewables increase cost of electricity", but you use a very peculiar approach to look for the evidence. Why not simply look at the amount spent to subsidize renewables, and the economics of renewable plants without the subsidies? Why not include the cost of maintaining a system with full generating capacity, to cover days when the wind doesn't blow?
"You cannot look at the pervasive dishonesty about the cost of renewables by itself. Instead, you have to see it as part of a bigger effort to rig the market." You could look in the mirror. If you really didn't think about the issues I raised, you should do more research before you repeat other people's talking points. If you did think about them, you should realize you undermine your credibility by pretending these issues don't exist.
Your statement is incorrect. Those studies DO NOT rely on subsidies. Certainly there are subsidies on both sides (yes, massive subsidies for fossil fuels, too). People have looked at this and there's no reason to think that they change this picture. See page 9 of https://www.lazard.com/media/xemfey0k/lazards-lcoeplus-june-2024-_vf.pdf
From the Policy Guide for Congress from the Berkeley 2035 study (https://energyinnovation.org/wp-content/uploads/2020/06/90-Clean-By-2035-Policy-For-Congress_June-2020.pdf)
"But without policy interventions, zero carbon electricity sources would only comprise 53 percent of our nation’s electricity in 2035." (I do not endorse the claim that zero-carbon electricity sources would comprise 53 percent of US generation in 2035 with no change to current policies, but I quote them on their own terms.)
They then list 16 specific policy recommendations, one of which is a statutory requirement for zero-emissions generation, two of which are tax credits for clean energy generation, and one is "greatly increased" subsidized financing.
The Lazard study is one way of examining the cost of electricity. It is intended to measure the cost of producing a small amount of electricity, assuming the electricity can be used as delivered. It doesn't address the cost of maintaining a delivery system.
This should address short-term load-balancing - currently, Europe sees many days with negative prices because there is more renewable generation than needed, but producers must still be paid.
It should also address long-term energy storage; PV solar obviously would need to be backed up to cover night-time requirements. Wind would also need to be backed up to cover windless days. Storage requirements could be mitigated by building excess generation capacity, so that current demand can be met even if renewable conditions are less than ideal.
I think it's worth mentioning the only "all-renewable" system I've heard of: El Hierro, one of the Canary Islands. This island has a population of 10,000, and built a wind plus pumped-hydro storage system intended to cover all their electricity requirements. It has a location as close to optimal as I've heard of. The system went online in 2015. It reportedly cost 54 million Euros, or 5,400 Euros per man, woman and child. Neglecting operating costs, which are certainly great than zero, this would imply a cost of electricity of 270-540 Euros per resident, depending on the cost of capital you assume. But the system has only provided about half the island's electricity requirements, so the fossil-fueled system must be maintained and operated.
I don't deny that renewables can be cost effective for some applications. Obviously, solar PV is viable for many space applications. It's also been used to power emergency road-side phones on public highways for many years; I assume there were no renewable subsidies involved for this. But claiming that LCOE demonstrates something about utility-scale generation is at best misleading. Among all the boosters and promoters of renewable generation, I almost never see anyone with any background in operating a power system. Certainly, some utility executives have said that they plan to build only renewable generation capacity, but this is in a context where state and federal regulators require renewable generation.
Subsidies might certainly be required to get a 90% clean grid by 2035. After all, why would we switch to clean energy if we're paying the same thing as our dirty fossil fuel grid. Nevertheless, subsidies are not required to get cost parity between a 90% clean grid and a fossil-fuel powered grid. You claims otherwise are incorrect.
You had claimed that renewables decrease costs. Are you switching to claiming cost parity?
As I wrote in the post: This discussion (that renewables save money) applies to grids that have significant fossil fuel generation in it, which is most grids. As grids become majority renewables, the economics and the behavior of the electricity market shift, as I explained here: https://www.theclimatebrink.com/p/is-renewable-energy-cheaper-than
I've read your explanation, but I don't see how it can possibly be true. In the past, the studies that have been ballyhooed as proving, once and for all, that renewables were cost effective compared to conventional generation have always included "weasel words" like "we assume that governmental organizations will continue to provide capital at preferential rates." Once you pick at the assumptions, the conclusions fall apart.
More recently, the reports don't include the weasel words, but also don't explicitly describe assumptions and methods. Maybe I'm being unfairly harsh, but I assume this means the weasel words are hidden, not that the fundamentals have changed.
Furthermore, Germany, Spain, the UK, and California generate large amounts of electricity, but significantly less than 50% of the total from wind and solar, yet they all see very high retail electricity prices coupled with significant days with negative wholesale prices. The high retail prices would seem to give the lie to the claim that non-dispatchable electricity lowers generation costs. The negative wholesale prices reflect the fact that much of the electricity generated is at times when it is not needed, and is therefore wasted.
This situation means that the LCOE calculations are not meaningful at levels of renewable generation currently seen in these countries.
Lastly, the Lazard LCOE study seems highly suspect, at least regarding treatment of capital cost. From page 13, increasing cost of capital by 138% increases cost of onshore wind by 48% and cost of utility PV by 61%. As you noted, the marginal cost of wind or solar generation is basically zero, meaning the cost is essentially all capital. Large increases in cost of capital should mean much larger increases in LCOE. I've written to Lazard to ask about this issue; I'll let you know if they respond.
At the personal pocketbook level, here is my example. Solar added to house with less than ideal sun coverage due to trees, even in January, has generated over half the electricity we use. That’s with an all electric house and two EVs and a well pump. In the 6 months of better sun we generate more than we use and have our own battery storage for overnight. If we cut trees around the house that would be true year round.
Another example, my sister in law lost power for three weeks as a result of Helene. Full solar power on house meant they cooked for neighbors, did laundry, offered showers and kept EV’s charged.
Did that cut the price of electricity? It did for my checkbook.
Yes, but what’s the payback period of the PV installation? I ran the numbers and it was about the useful age of the installation. So not worth doing then…
Thank you Andrew for this clearly written example. These last few years it has been interesting to observe what comes out of Austin and DC , vs what has actually happened in TX. It is now the US greatest producer of renewable energy, i.e. wind power: https://www.weforum.org/stories/2022/04/us-wind-electricity-generation-renewable-energy/#:~:text=Wind%20power%20is%20the%20largest,by%20Iowa%2C%20Oklahoma%20and%20Kansas.
Here in Hawaii and beyond, when ever I here negativity about solar and renewable energy, it most always ordinates from the Petro machine spewing FUD
Sorry, this is misleading because you are just looking at the wholesale costs and not total system costs. It might work differently in the US, but in the UK offshore wind for instance may bid £1/MWh into the market, get paid the market price for that period but then receive a massive subsidy on top to the Contract for Difference (CfD) strike price.
I explained that here:
https://open.substack.com/pub/davidturver/p/renewables-increase-electricity-bills?r=nhgn1&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false
Last year in 2024, the average cost on our bills of CfD-funded offshore wind was £154/MWh. £86/MWh was paid in subsidy and £67/MWh was the market price (set by gas):
https://davidturver.substack.com/p/record-cfd-subsidies-in-2024
In total we pay over £11bn in renewables subsidies each year for these "cheap" renewables across Renewables Obligations, CfDs and Feed-in-Tariffs. If renewables really were cheap they would not need subsidies.
Moreover, you are missing the extra costs of balancing the grid (£2.5bn) to cope with the volatility of wind generation, the backup costs that in the UK are paid through the capacity market (£1bn). In addition, because offshore wind farms are remote and diffuse, we need to pay massive extra sums to extend the grid to connect those assets - the National Grid has announced £112bn of spending out to 2035.
This is a great, straightforward description of how wholesale electricity pricing works.
Great explanation, thanks
On the correlation between price and renewable penetration it definitely appears that windy states have benefitted from wind power development. It will be interesting to see if solar can do the same for sunny states. And what will be the fate for states that are not terribly windy or sunny? I imagine they’ll get to a low price renewable future eventually but it’s tougher to justify at scale deployment in non-ideal places without subsidies…
Yes. Wind and solar reduce wholesale power prices by oversupplying the market with subsidized, zero marginal cost power. However, the retail power prices rise, which is what consumers actually pay, and the retail prices include the hidden costs of wind and solar like the transmission lines, backup generation etc.
It’s also interesting to note that you discuss the mechanism by which wind and solar force other generators out of the market but you don’t explain what happens when those resources are needed and wind and solar don’t show up to work.
Your point about backup misunderstands how energy markets actually operate, as explained in the post.
The question about transmission is an interesting one. The CREZ lines cost less than $10 billion, and renewable energy has saved Texans much more than that. Thus, I think the argument that this makes solar and wind more expensive is not supported by data.
You also asked the question about what happens if solar and wind push too much dispatchable power out of the market. That’s a legitimate issue when renewable energy penetration dominates the energy market, but that’s certainly not a problem in any market today.
I already touched on that sir. The retail rate includes a lot more than just the wholesale power price. As the wind and solar grow their market share the integration costs show up in the retail price. In ERCOT the grid is already close to being undersupplied during high demand periods if wind and solar don’t show up. That’s why TX is subsidizing gas plants and putting more money into the ancillary services market. It’s effectively the same the same thing California does with its reliability must run payments.
Is there a quantification of these integration costs? If they’re so large, I’d love to see the data.
Yes, the Texas grid is close to limits during high demand. That’s not a problem with solar and wind, that’s a consequence of how the market is designed.
But in your post you said the market provides the backup power needed for wind and solar. Either the “merit order” market works or it doesn’t. Which is it?
Brent Bennet at TPPF is working on some numbers. I’ll try to remember to post the link when it’s published
Merit order IS the market design. The incentives are wrong. If you think about it logically, the incentive is to literally NEVER need to displace a higher cost producer. As long as gas fired generation has to be turned on, consumers are forced to pay that higher rate. It is fundamentally a rent seeking market design.
I am thinking about it logically and I don't see any logic in your claim. Of course high-cost producers are being displaced, that's why coal is getting pushed out the market.
The article’s analysis is superficial and incomplete because it:
1. Fails to include subsidies and taxpayer-funded incentives.
2. Ignores the capital and operational costs of necessary backup systems.
3. Overlooks the hidden costs of grid infrastructure upgrades and balancing mechanisms.
4. Pretends that renewables are a simple, low-cost bonus when in fact, they represent a duplicated energy system—one unreliable system layered on top of another.
In the end, the consumer pays for everything: the renewables, the backup, the subsidies, the grid upgrades, and the inefficiencies. Claiming that renewables “cut costs” without this full accounting is, frankly, misleading.
I look at the UK grid, which is chock full of wind power, and all I see are rising bills.
I speak for myself. I have solar on five buildings. It has not been a good investment. Heavy snow destroyed one 30 kw array and caused hundreds of roof leaks. I rebuilt the array but the roof kept leaking. Recently I took the array down , put a new metal roof on and cut my losses. What a hassle.
Sunlight is free. Solar equipment and roofs are far from free.
Sorry you had such a bad experience. Rooftop solar is, I think, a really good thing in general, but it obviously has potential downsides.
While I totally agree with the thesis of this article (and great examples explaining the facts), I decided to do a search on “Green Premium” and was surprised to see a lot of hits. Some of course represent fossil fuel interests, and many others are about topics other than power generation (e.g. materials manufacturing and agricultural products). The term “green premium” seems to have been coined by Bill Gates at least five years ago, and as you show, it is obsolete. But I suppose many interests still want to keep it in “meme” status.
The thing to remember is that the price of renewable energy has dropped a huge amount in the last decade—solar has dropped 90%, for example. So, if you go back a decade, there was a green premium because renewable energy WAS more expensive. But today, there is none.
The example you have given is adding a small amount of wind power to a grid that already has excess capacity and, in that case, it works. You have 130 MW of fossil fuel capacity and a demand of only 100 MW. Now suppose we want to power electric vehicles, AI centres, etc. and the demand on our grid is anticipated to be 160 MW. The 30 MW of wind power doesn’t help us to do this because on some days it will be zero. Even if we had 60 MW of wind power we would be in the same situation. To meet that demand we would have to build a new 30 MW fossil fuel generator. Unless there is someway of storing the wind energy or importing power from somewhere else, we cannot add wind power without back up fossil fuel. Now in TX you would have solar as well but in many northern countries solar is not useful in January.
This discussion applies to grids that have significant fossil fuel generation in it, which is most grids (e.g., Texas is 30% renewable, 60% fossil fuel, 10% other). The conclusion is that renewable energy is saving us money *right now*.
As grids become majority renewables, the economics and the behavior of the electricity market shift, as I explained here: https://www.theclimatebrink.com/p/is-renewable-energy-cheaper-than
That’s my point. It will not be possible to build a grid that is completely wind/solar - your article referred to above suggests we might get to 57% but that depends a lot on the site and the statistics for wind/solar at that location. In any case we STILL need backup for all of that wind/solar unless we have economical storage. And we would like that backup to be zero carbon. That can only be provided by nuclear and who is going to build a reactor that operates a fraction of the time? Where I live (Canada) solar is not very useful and it be better to forget wind/solar and just build nuclear. Plus we won’t have to find some place to put all those turbines and solar farms.
See https://www.2035report.com/electricity/ for an analysis of how we get to 90% clean electrical grid while paying the same as we do today. the last 10% may be expensive, no one really knows.
Andrew, do you read the material you cite?
From page 15 of the report: "In the No New Policy case, however, the grid mix is determined by least-cost capacity-expansion modeling based on the current paradigm for electricity-market costs". In other words, the least-cost grid in 2035 is mostly fossil-powered.
"The 90% Clean case assumes implementation of policies that promote large- scale renewable energy adoption and yield net societal benefits compared with the business-as-usual approach assumed under the No New Policy case. As detailed in Sections 3.3 and 3.6, the nominal electricity cost increases under the 90% Clean case are more than offset by the societal benefits provided by that case." In other words, they rely on non-economic benefit to justify higher energy costs.
From page 21: "Wholesale electricity (generation plus incremental transmission) costs are lower in 2035 under the 90% Clean case than they are today (Figure 9)." But wholesale costs depend on continued and expanded subsidies, tax credits, subsidized debt financing, and other financial and legal support for renewable generation. (From the Policy Summary for Congress, https://energyinnovation.org/wp-content/uploads/2020/06/90-Clean-By-2035-Policy-For-Congress_June-2020.pdf)
I'm sorry, but what you're saying is wrong. In its core cost comparisons showing that the 90% clean grid would be comparable/cheaper than today's grid, the report looks at actual underlying costs without counting the effects of subsidies like tax credits.
What is your basis for this claim? Are you claiming that the report assumes current subsidy programs would be terminated? Even the No New Policy case must assume that current policies continue, and current policies include multiple tax credits for zero carbon electricity and subsidized financing from the Department of Energy.
Brian, i was reading about the UK wind farms that require CfD and FiT to make it worthwhile to turn them on. They also receive millions in constraint payments (low wind and too high wind) and the full capex costs of connection to the grid, resistance losses, stabilization, grid hardening and VAR control are not counted. These are paid by consumers under the transmission expenses. Your analysis seems to mirror this. Me thinks Andrew is missing some costs, if they only had $50/mw in their revenue stream they would not be there.
Yes, agreed. The back-up is so large and costly (and usually just the grid youre trying to replace) that why not just find a low co2 thermal source? Not too many of them technologies
Great blog! It clearly explains how switching to renewable energy not only helps the environment but also cuts long-term energy costs. A smart move for both your wallet and the planet!
https://bluebirdsolar.com/
Another argument is that while renewables bring down the wholesale price, the total price increases, because renewable energy requires more grid upgrades (higher grid fees) and more grid services (balancing, frequency etc). Is this backed up by data?
Why split hairs about solar and wind, and whether or not they are cost saving, but instead embrace the most efficient means of energy production, nuclear.
Silicon refinement for solar panels emits tons of CO2:
https://open.substack.com/pub/chrisrivet/p/the-dark-side-of-going-solar?r=1s9bsd&utm_medium=ios
Nuclear is great if you want energy prices that will bankrupt our economy. As far as the argument of CO2 released from solar panels, that’s a red herring. If you have a grid that is entirely renewable, then you can make solar panels with zero emissions.
France has been heavy(80+%) on nuclear for decades and definitely not bankrupt. Germany, on the other hand, goes heavy on renewables for only a few years and is already backing out. Dunkelflaute.
How is silicon refined if not by the Berzelius method? It’s a coal consuming, energy hog, which is why PV ranks so poorly in EROI.
See table under section: EROI and payback periods of some types of power plants
https://en.m.wikipedia.org/wiki/Energy_return_on_investment