The late Harvard Prof. James McCarthy gave a talk years ago in which he said that the climate-change denial story would have three phases: (1) it’s not true; and when that became untenable, (2) it’s too expensive to do anything about it; then finally (3) it’s too late. While (1) hangs on forever in some form or other, the current administration seems to be somewhere between (2) and (3). This Substack and previous ones by Dr. Dessler are great demonstrations that refute (2). I have to fear the future if (3) is the path we choose.
I find it incomprehensible that somehow the rising cost of electricity is a news story with nary a mention of the fact that renewable energy is the solution.
Once you know the economics, you see clear as day how the energy source with the highest marginal cost (coal or gas) sets the price. So if your electricity bill is high, you know who to blame.
"It is worth noting that overall system costs will increase as variable renewables reach higher penetrations due to the increased need for energy storage and dispatchable resources to fill in gaps in generation."
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Another increase in "overall system cost" will come with upgrading the transmission network. This isn't just about replacing aging equipment, but building out with more *resilient* infrastructure. For example, with the increase in derechos like the one that ran from Houston to New Orleans, transmission towers that were rated for 60mph (96kph) winds would today be required to handle 80mph (128kph). Also, in the US, tariffs significantly increase the material cost per stanchion and per transmission mile.
"There is a persistent argument in certain circles that renewable energy is associated with higher costs than fossil fuels...."
----
Independent of greenhouse gas emissions, the "cost" of fossil fuels includes a lot of externalities: massive oil spills despoiling natural environments (including a whole lot of places that don't make US news), contamination of aquifers, warping of international relations (Saudi Arabia is our ally...really?), lung- and heart-damaging combustion products, coal slurry pond dams, mountaintop removal, and access canals accelerating the disappearance of south Louisiana. The US spends $80B a year just on defense of the shipping lanes in the Strait of Hormuz.
Between the PTC and RECs, solar/wind received subsidies nearly equal to the LCOE of gas. Let’s not pretend that subsidies really lower costs.
An alternative for the windy states would have been to replace expensive coal with cheaper gas, rather than highly subsidized wind. This is not good for climate change, but you only discuss the cost.
The analysis is misleading because, in the long run, solar/wind costs will rise exponentially due to overbuilding, storage, and transmission upgrades. The more reliable the intermittent energy, the more expensive it becomes.
The costs of fully installed solar farms, wind farms, and BESS have not decreased over the last six years. Check the past NREL and EIA price guides, and you will see that I am correct. The falling price of solar modules and battery cells is irrelevant.
Advocates of solar and wind power routinely use unrealistically low cost inputs in their models, rather than utilizing research-grade data available from the NREL and the EIA.
For those who are interested in an accurate prediction of future solar and wind costs:
Thanks for linking to your data. Could you identify which data you used? I must be missing something, because all the state-level tables I could find go back to either 2015 or 2013.
If it's helpful, there is a lot of state-level data here which often goes back to 2001 (which I assume is similar to specific tables that Zeke used): https://www.eia.gov/electricity/data/state/
Some metrics even go back to 1960 (but are spread across multiple files).
Its all from the electric power monthly report. The EIA just has different ways to access that data (and historical issues of the report!). But the two links above will get you the price by state and generation by state for each month since 2001 that I used in this piece.
The correlation in the graph appears at first glance to be driven by a handful of states with a high fraction of renewable generation. These small states also export a large fraction of their generation. Is it possible that it is actually these exports have kept intra-state costs down?
If you exclude the last four datapoints you'd still get a negative trend (albeit slightly less negative). But the point on interstate exports and imports is an important one. Electricity grids don't respect state borders (at least outside of Texas!), so a slightly more rigorous version of this analysis would probably use NERC regions or subregions.
It still looks like low population states dominate the correlation. Given the huge range, one might argue that you should use a correlation where each point is weighted according to its population or the size of its electricity market.
But hydro (whether new or not) when combined with solar and wind cuts down or eliminates the intermittency. Managing water behind a dam as a "battery" for times of no sun (night, winter) makes enormous sense, but requires the sources of energy to be properly managed and integrated. In places where hydro is not available, pumped hydro plants have been used. These require 2 lakes perhaps 200 to 300m different in elevation (and often available at old mines) that pump water from the lower to upper when excess power occurs (during day for solar) and then water runs through turbines to generate power when needed. The water is recycled. Switzerland has a lot of pumped hydro. It has a cost up front to build but lasts for over 80 years and is almost as efficient as a new conventional battery (80 to 90%), but the latter become less efficient over time and have to be tossed (etc) over a couple of decades.
Be good to know the barriers to having a fully integrated system. Often different private companies own different bits and this prevents integration
One disadvantage of pumped storage is the sheer volume of water required to store large amounts of energy. Pump a cubic meter of water up 100 m and you have stored at most 0.28 kWh. A cubic meter of batteries can store 1500 times as much energy … and you can put it anywhere.
Current estimates of capital costs for storage systems (not just the batteries) are about $300 per kWh. Hard to put a number on pumped storage but one benchmark would be the proposed facility at Meaford, Ontario which is estimated at $375 US per kWh. As you point out, this facility would last longer but, on the other hand, the cost of batteries is going down while the cost of infrastructure projects is going up.
I am rooting for New Mexico to lead the nation in percentage of non-hydro renewables sometime between 2027, when the SunZia project is complete, and 2031, when Arizona Public Service shuts down the remaining coal plants. I estimate that we will be approaching 75 - 80% generation by wind and solar at that time.
4. From there you can choose Sectors, Geography and Fuel Type. If you want you can default to all. I recommend unselecting regions unless you want to look at that.
5. Download a CSV table.
6. I usually have ChatGPT help me read and process the data.
What do we mean by "electricity prices"? If we are referring solely to the cost of energy generation, solar and wind are the most affordable options. However, their large-scale deployment necessitates a restructuring and expansion of the grid, which can easily outbalance their cost-effectiveness. Germany serves as a prime example: despite the growth of renewables, particularly solar and wind, electricity prices have not decreased because resources are now primarily allocated to grid development. In fact, Germany has some of the highest electricity prices in the world. Things are more complex than it seems. I wouldn't present the transition to renewables as the cheapest solution; it involves sacrifices, including economic ones, which should not be downplayed.
By electricity prices I mean just that: the average electricity price paid by consumers each year in each state. That should nominally include any system costs (transmission, storage, etc.) that are ratebased.
FWIW, transmission costs would go up even with the legacy power plants just to harden the grid against increasing extreme weather. The total demand is growing, too, meaning new transmission capacity is required (whether for RE or thermal plants).
I believe it was Germany that built an LNG terminal in record time after Russia invaded Ukraine. Did that add to electricity prices or was that charged to the private sector?
They not only built LNG terminals, but the new government is also doubling down on new (unnecessary) gas power plants "to stabilize the grid against potential blackouts," so the story goes. So far, however, there hasn't been much change in electricity prices.
It also heavily depends on import possibility. Now Germany can import tons of cheap hydro from Norway through Denmark and cheap nuclear from France. But NW said one of the DK cables life will not be extended and Fr wants to add some datacenters. This can impact the prices
The late Harvard Prof. James McCarthy gave a talk years ago in which he said that the climate-change denial story would have three phases: (1) it’s not true; and when that became untenable, (2) it’s too expensive to do anything about it; then finally (3) it’s too late. While (1) hangs on forever in some form or other, the current administration seems to be somewhere between (2) and (3). This Substack and previous ones by Dr. Dessler are great demonstrations that refute (2). I have to fear the future if (3) is the path we choose.
I think Suzuki is probably right , and number 3 is upon us.
I find it incomprehensible that somehow the rising cost of electricity is a news story with nary a mention of the fact that renewable energy is the solution.
"I find it incomprehensible...."
----
Take a deep breath.
It's July 2025. You should have made peace with the incomprehensible obscenities of the Trump administration and its complicit news media by now.
Thanks for spreading the good word. I recently wrote about how energy markets work: https://www.complexeffects.com/p/a-lesson-for-maga-in-electricity
Once you know the economics, you see clear as day how the energy source with the highest marginal cost (coal or gas) sets the price. So if your electricity bill is high, you know who to blame.
"It is worth noting that overall system costs will increase as variable renewables reach higher penetrations due to the increased need for energy storage and dispatchable resources to fill in gaps in generation."
----
Another increase in "overall system cost" will come with upgrading the transmission network. This isn't just about replacing aging equipment, but building out with more *resilient* infrastructure. For example, with the increase in derechos like the one that ran from Houston to New Orleans, transmission towers that were rated for 60mph (96kph) winds would today be required to handle 80mph (128kph). Also, in the US, tariffs significantly increase the material cost per stanchion and per transmission mile.
"There is a persistent argument in certain circles that renewable energy is associated with higher costs than fossil fuels...."
----
Independent of greenhouse gas emissions, the "cost" of fossil fuels includes a lot of externalities: massive oil spills despoiling natural environments (including a whole lot of places that don't make US news), contamination of aquifers, warping of international relations (Saudi Arabia is our ally...really?), lung- and heart-damaging combustion products, coal slurry pond dams, mountaintop removal, and access canals accelerating the disappearance of south Louisiana. The US spends $80B a year just on defense of the shipping lanes in the Strait of Hormuz.
Between the PTC and RECs, solar/wind received subsidies nearly equal to the LCOE of gas. Let’s not pretend that subsidies really lower costs.
An alternative for the windy states would have been to replace expensive coal with cheaper gas, rather than highly subsidized wind. This is not good for climate change, but you only discuss the cost.
The analysis is misleading because, in the long run, solar/wind costs will rise exponentially due to overbuilding, storage, and transmission upgrades. The more reliable the intermittent energy, the more expensive it becomes.
The costs of fully installed solar farms, wind farms, and BESS have not decreased over the last six years. Check the past NREL and EIA price guides, and you will see that I am correct. The falling price of solar modules and battery cells is irrelevant.
Advocates of solar and wind power routinely use unrealistically low cost inputs in their models, rather than utilizing research-grade data available from the NREL and the EIA.
For those who are interested in an accurate prediction of future solar and wind costs:
https://schlanj.substack.com/p/even-if-solar-panels-and-batteries
Thanks for linking to your data. Could you identify which data you used? I must be missing something, because all the state-level tables I could find go back to either 2015 or 2013.
Thanks!
If it's helpful, there is a lot of state-level data here which often goes back to 2001 (which I assume is similar to specific tables that Zeke used): https://www.eia.gov/electricity/data/state/
Some metrics even go back to 1960 (but are spread across multiple files).
The EIA also has a useful data browser tool; here are state-level electricity prices back to 2001, for example: https://www.eia.gov/electricity/data/browser/#/topic/7?agg=0,1&geo=vvvvvvvvvvvvo&endsec=vg&linechart=ELEC.PRICE.TX-ALL.M~ELEC.PRICE.TX-RES.M~ELEC.PRICE.TX-COM.M~ELEC.PRICE.TX-IND.M&columnchart=ELEC.PRICE.TX-ALL.M~ELEC.PRICE.TX-RES.M~ELEC.PRICE.TX-COM.M~ELEC.PRICE.TX-IND.M&map=ELEC.PRICE.US-ALL.M&freq=M&start=200101&end=202504&ctype=linechart<ype=pin&rtype=s&pin=&rse=0&maptype=0
And Hannah already identified the data source for generation by state: https://www.eia.gov/electricity/data/state/generation_monthly.xlsx
Thanks! I'll take a look. Does this mean the data you used came from a different source than the one you linked?
Its all from the electric power monthly report. The EIA just has different ways to access that data (and historical issues of the report!). But the two links above will get you the price by state and generation by state for each month since 2001 that I used in this piece.
Thanks! I'll take a look.
Edit: This looks like interesting information, but I was hoping to find the price information that fed Zeke's analysis.
The correlation in the graph appears at first glance to be driven by a handful of states with a high fraction of renewable generation. These small states also export a large fraction of their generation. Is it possible that it is actually these exports have kept intra-state costs down?
If you exclude the last four datapoints you'd still get a negative trend (albeit slightly less negative). But the point on interstate exports and imports is an important one. Electricity grids don't respect state borders (at least outside of Texas!), so a slightly more rigorous version of this analysis would probably use NERC regions or subregions.
It still looks like low population states dominate the correlation. Given the huge range, one might argue that you should use a correlation where each point is weighted according to its population or the size of its electricity market.
Should that be based on total kWh instead? Aunt Patootie and the Giant Widget Corporation represent widely disparate usage.
That would be another option. I don’t think there is a “right” way to do this.
Very helpful, thanks.
But hydro (whether new or not) when combined with solar and wind cuts down or eliminates the intermittency. Managing water behind a dam as a "battery" for times of no sun (night, winter) makes enormous sense, but requires the sources of energy to be properly managed and integrated. In places where hydro is not available, pumped hydro plants have been used. These require 2 lakes perhaps 200 to 300m different in elevation (and often available at old mines) that pump water from the lower to upper when excess power occurs (during day for solar) and then water runs through turbines to generate power when needed. The water is recycled. Switzerland has a lot of pumped hydro. It has a cost up front to build but lasts for over 80 years and is almost as efficient as a new conventional battery (80 to 90%), but the latter become less efficient over time and have to be tossed (etc) over a couple of decades.
Be good to know the barriers to having a fully integrated system. Often different private companies own different bits and this prevents integration
One disadvantage of pumped storage is the sheer volume of water required to store large amounts of energy. Pump a cubic meter of water up 100 m and you have stored at most 0.28 kWh. A cubic meter of batteries can store 1500 times as much energy … and you can put it anywhere.
But how much cost are those batteries and how long do they last!
Current estimates of capital costs for storage systems (not just the batteries) are about $300 per kWh. Hard to put a number on pumped storage but one benchmark would be the proposed facility at Meaford, Ontario which is estimated at $375 US per kWh. As you point out, this facility would last longer but, on the other hand, the cost of batteries is going down while the cost of infrastructure projects is going up.
Anyway pumped hydro depends on the availability of appropriate lakes.
I found this:
Currently, the cost of pumped hydro energy storage is around $150 per kWh, while the cost of battery storage ranges from $300 to $500 per kWh.
It depends where you are and what country.
I am rooting for New Mexico to lead the nation in percentage of non-hydro renewables sometime between 2027, when the SunZia project is complete, and 2031, when Arizona Public Service shuts down the remaining coal plants. I estimate that we will be approaching 75 - 80% generation by wind and solar at that time.
There is a way to get at the small scale solar photovoltaic for the same time period if you want to in the future.
1. Go to EIA Electricity Data Browser, https://www.eia.gov/electricity/data/browser/
2. Select Annual.
3. Select Filter/Order button.
4. From there you can choose Sectors, Geography and Fuel Type. If you want you can default to all. I recommend unselecting regions unless you want to look at that.
5. Download a CSV table.
6. I usually have ChatGPT help me read and process the data.
I hope that helps and/or is useful.
Peter Sinclair's video summary of the forecast of US utility costs:
https://www.youtube.com/watch?v=MHfwTFEKgg0
What do we mean by "electricity prices"? If we are referring solely to the cost of energy generation, solar and wind are the most affordable options. However, their large-scale deployment necessitates a restructuring and expansion of the grid, which can easily outbalance their cost-effectiveness. Germany serves as a prime example: despite the growth of renewables, particularly solar and wind, electricity prices have not decreased because resources are now primarily allocated to grid development. In fact, Germany has some of the highest electricity prices in the world. Things are more complex than it seems. I wouldn't present the transition to renewables as the cheapest solution; it involves sacrifices, including economic ones, which should not be downplayed.
By electricity prices I mean just that: the average electricity price paid by consumers each year in each state. That should nominally include any system costs (transmission, storage, etc.) that are ratebased.
FWIW, transmission costs would go up even with the legacy power plants just to harden the grid against increasing extreme weather. The total demand is growing, too, meaning new transmission capacity is required (whether for RE or thermal plants).
I believe it was Germany that built an LNG terminal in record time after Russia invaded Ukraine. Did that add to electricity prices or was that charged to the private sector?
They not only built LNG terminals, but the new government is also doubling down on new (unnecessary) gas power plants "to stabilize the grid against potential blackouts," so the story goes. So far, however, there hasn't been much change in electricity prices.
Gas firming is necessary due to coal phaseout. Fraunhofer ise, top pro ren institute in Germany recommends 80+gw of gas and ccgt by 2035 in a pessimistic demand scenario and much more otherwise https://www.ise.fraunhofer.de/en/publications/studies/paths-to-a-climate-neutral-energy-system.html
DE price would likely rise if eeg wasn't subsidized considering https://www.ewi.uni-koeln.de/en/news/medium-term-forecast-around-18-billion-euros-in-eeg-funding-in-2025/
It also heavily depends on import possibility. Now Germany can import tons of cheap hydro from Norway through Denmark and cheap nuclear from France. But NW said one of the DK cables life will not be extended and Fr wants to add some datacenters. This can impact the prices
Big oil chose profits rather than LIFE.