In the early months of 2025, new power generation in the U.S. was dominated by solar and wind energy. The Federal Energy Regulatory Commission (FERC) reported the addition of 15 Gigawatts (GW) of capacity—11.5 GW from solar, 2.3 GW from wind, and 1.3 GW from gas. Voices from the industry, like Stephanie Bosh from the Solar Energy Industries Association, commend this trend as proof that solar is “faster and cheaper than any other source.” But is that really the case?
As the grid shifts to rely more on wind and solar, the reality beneath this transition is a bit concerning. These intermittent energy sources can lower electricity costs, but they also bring along hidden expenses that may jeopardize reliability and affordability.
The core issue lies in the inconsistency of solar and wind power. Solar energy is non-existent at night and limited during the early morning and late evening when it’s often overcast or rainy. Wind power tends to be unpredictable too. This intermittency doesn’t just replace traditional fossil fuels like natural gas and coal; it necessitates inefficient backup systems as well. In certain cases, states have invested heavily in solar power infrastructures only to find themselves more dependent on these inefficient sources.
Terming fossil fuel backups as “backups” is somewhat misleading. It’s akin to calling a starting pitcher a backup to someone who only pitches when conditions are right—essentially, when the wind is blowing or the sun is shining.
Fossil fuels, coal, and natural gas make up 60-75% of the operating costs. To maintain affordability, prices often need to rise to offset reduced sales. When renewable energy saturates the market during peak production, it temporarily drives down wholesale prices. Essentially, subsidized renewables set the market price, which can result in larger profits on other grids.
However, in cases of high demand—think of evening hours when the need for energy spikes—these intermittent sources often lead to higher costs, as they can’t fill in during those crucial times. This dynamic sets a price point that affects all energy producers.
Take a look at places with abundant sun and wind. In California, for instance, energy prices sit at around 30 to 35 cents per kilowatt-hour (kWh), which is significantly above the U.S. average of 17 cents, all despite being powered by 50% renewables. Germany’s rates are also high, ranging from 36 to 41 cents per kWh. Similarly, Denmark and the UK see rates around 37 cents and 29-32 cents, respectively.
These ambitious efforts bring to light a few myths. While wholesale prices can dip with renewables, retail costs tend to rise due to taxes, subsidies, grid improvements, and the necessary use of full-time fossil fuels to back up renewable sources.
In California, the demand from electric vehicles (EVs) and data centers adds further strain, often necessitating more backup plants, which operate inefficiently, causing an increase in emissions and ultimately leading to higher costs. These plants may set the prices that every generator needs to follow.
For systems reliant solely on hydro, nuclear, gas, and coal—sources that can be dispatched on-demand—there’s a reduced need for peaker plants to kick in. These sources can adjust to demand effectively, countering the unpredictability associated with renewable energy. Hydro power can respond immediately, nuclear provides a steady output, and fossil fuels can be called upon to meet demand. Historically, this system has proven both effective and cost-efficient.
In solar-heavy regions like California, backup plants are often used less than 10% of the time. In cases of heavy sunshine, they can exceed 20% usage, creating a situation where the energy generation resembles the shape of a duck on a graph.
Incorporating more renewable energy means building additional, often underutilized peaker plants, which can inflate costs. This can negate much of the carbon reduction hoped for through these investments in wind and solar power.
Transmission costs further complicate matters, especially with wind and solar often located far from urban centers. Bringing this energy to the cities requires expensive high-voltage lines, costing $1-3 million per mile—far more than the infrastructure needed for nearby fossil fuel or nuclear plants.
The U.S. faces an estimated $450 billion bill by 2035 for integrating renewables, potentially adding at least 2 cents per kWh to energy rates. In Germany, a €70 billion upgrade may see costs rise by an additional 3 cents per kWh. Claims of renewables being “cheap” often overlook these transmission and backup costs. When those are factored in, solar’s costs could surge by over 30%.
The FERC estimates a considerable increase of 84% in renewable energy capacity by 2028, further threatening both reliability and affordability of the grid.
While certain policies may slow growth, the trends remain. We need to confront the realities tied to wind and solar energy. Power outages and rising costs can’t be ignored.
