Roger Caiazza
When questioned about affordability, New York Climate Leadership & Community Protection Act (Climate Act) proponents have claimed that renewable energy development can reduce costs. This article responds to their argument that reduced fuel price volatility will make renewables cheaper.
The December 18, 2024 New York Assembly Committee on Energy public hearing enabled legislators to question New York State Energy Research & Development Authority (NYSERDA) and New York State Department of Public Service (DPS) staff about Climate Act progress. Jessica Waldorf, Chief of Staff & Director of Policy Implementation, DPS was asked what impact Climate Act GHG emission reductions would have given that New York emissions are smaller than the observed annual increases in global GHG emissions. Waldorf said that there are other reasons “to build renewable energy resources in New York that are not just related to emissions.” She gave two reasons: energy security and price volatility.
The other thing I would say about energy security is price volatility. Customers are beholden to the whims of the fossil fuel industry and the up and down markets that we see from fossil fuels. Localizing our energy production and renewables allows us for price stability. That is definitely a benefit of building resources here.
The claim was also made at an New York State Energy Plan Planning Board on March 3, 2025 to adopt the scope for the state energy plan the claim was mentioned. The presentation by Jeff Freedman from the Atmospheric Sciences Research Center, University at Albany, Albany, New York included the following slide that makes the claim that renewable energy can reduce costs.
One characteristic of the NYSERDA documentation is lack of detail, so it is not surprising that the justification for the claim is not readily available. Table 6-1 was in New York State Climate Impacts Assessment Chapter 06: Energy. That chapter does not address renewable energy costs specifically. I searched for references for costs in the chapter and found only one relevant reference on page 370:
Energy costs: Fossil fuel prices are increasingly volatile, largely because they are traded on global markets. In contrast, a power sector composed of large volumes of renewable resources that have no fuel costs could lead to less volatile energy bills due to the elimination of this driver of variability in energy costs. The presence of distributed resources amplifies this effect. Whether the costs of a clean power sector are lower than, comparable to, or higher than the status quo, they will be more predictable and less likely to create indirect costs that arise from unexpected price changes.
The presumption in this article is that the basis of these claims that renewable energy will be cheaper and less volatile is that a renewable energy dependent electric system will have less unstable fuel costs resulting in cheaper and more secure energy. This in turn is based on two presumptions: fuel prices are volatile because of global markets and renewables would eliminate this cost driver.
Fuel Volatility
The US Energy Information Administration (EIA) noted in June 2024 that fossil fuel price volatility has shown significant changes over time, with recent years experiencing particularly high levels of volatility: “In 2022, natural gas price volatility reached extreme levels, with historical volatility peaking at 171% in February 2022, the highest since at least 1994.” Note that EIA is only discussing natural gas volatility which has become a much larger electric generating fuel source in recent years. In my opinion, the increasing reliance on a single fuel could be the fundamental reason for the observed increase in volatility.
In any case, the New York agency global market argument picks just one driver for fuel price volatility. The EIA gave other reasons for natural gas variability in August 2022:
Increased uncertainty about market conditions that affect natural gas supply and demand can result in high price volatility. Events that have contributed to changing market conditions include:
- Production freeze-offs
- Storms
- Unplanned pipeline maintenance and outages
- Significant departures from normal weather
- Changes in inventory levels
- Availability of substitute fuels
- Changes in imports or exports
- Other sudden changes in demand
U.S. natural gas prices are typically more volatile during the first quarter of a year because of the fluctuating demand for natural gas for space heating as weather changes. Factors that contributed to heightened volatility in the first three months of this year include:
- Weather-driven fluctuations in natural gas demand
- Declining natural gas production in January and February
- Declines in Lower 48 states’ working natural gas levels
- Record U.S. LNG exports to Europe to help offset reduced natural gas supplies from Russia
Of the eight events that contribute to changing market conditions and fuel volatility is the only one is related to global market conditions.
There is one other aspect of volatility. In today’s electric system prices spike when load peaks during the hottest and coldest annual events. When the electric grid becomes dependent upon weather dependent wind and solar resources, prices will also spike when there are resource lulls. That effect will be exacerbated when the two coincide. I believe that this volatility will be more frequent, just as severe, but for shorter periods than any fuel price volatility caused by global events.
European Experience
However, if the fuel volatility claim is true then proponents should be able to point to jurisdictions where wind, solar, and energy storage have make electric prices cheaper. The best example of the claim that renewable energy is cheaper because it reduces fuel volatility should be Germany. Oil, coal and gas prices spiked in the immediate aftermath of Russia’s invasion of Ukraine and have been volatile ever since. Germany’s Energiewende is the country’s planned transition to a low-carbon, nuclear-free economy and is often cited as an example of what New York should do. Enerdata reports that “According to the German Federal Network Agency, the installed renewable power capacity in Germany increased by nearly 20 GW (+12%) to nearly 190 GW in 2024.” If the proponent’s claim is true then prices should be trending down. However, since 2000, electricity prices for German households have risen by 116%, from 13.94 to 30.43 cents per kilowatt-hour in 2019 . As of April 1, 2024, households with basic supplier contracts were paying around 46 cents per kilowatt-hour, making it “the most expensive option compared to other providers or special contracts” .
Another way to look at the claim is to compare electricity prices within the European Union. I highly recommend the Nemeth Report for its coverage of European energy issues. The post EU Action Plan for Affordable Energy includes just such a comparison. It quotes Ursula von der Leyen, President of the European Commission, as saying: “We’re driving energy prices down and competitiveness up. We have already significantly reduced energy prices in Europe by doubling down on renewables. “
However, the data in the following figure do not support her claim.
The analysis states that:
Note that the household price average shows a large difference between EU countries that use coal, nuclear, and gas vs those that have focused on wind and solar. For example, as shown in the chart above, according to Statista, using 2023 data, Hungary’s electricity price was 9.68 Eurocents/kwh (50% of their electricity is from nuclear, 38% coal & gas) and Bulgaria which relies mostly on coal and nuclear was around 11 Eurocents/kwh, whereas Germany, which has “doubled down on renewables” (and closed down its nuclear), was the highest at 44.97 Eurocents/kwh and Denmark which has a small population and a whole lot of windmills was at 39.44 Eurocents/kwh!
Data sources and the year of the data matters. Eurostat uses numbers from the first quarter of 2024 which reorder some of the countries but the overall argument, that countries that “doubled down on renewables” and made other poor choices of shutting down nuclear power plants and/or coal experienced higher prices, remains supported.
Discussion
Roger Pielke, Jr recently posted an article about the politicization of expertise that is relevant here. He argues that society needs to depend on the expertise of specialists in many fields – “Nobody knows enough to run the government”. As a result, society needs all of us. He explains that “We do not have to agree on everything, but we do have to work together”. Then he points out that “In recent years, credential expertise—like many things—has become pathologically politicized.”
Such is the case shown by the politicization of the Climate Act implementation led by NYSERDA. The presenters at the meeting were carefully chosen to further the Hochul Administration’s narrative that all is well with the Climate Act. Consider, for example, the presentation by Jeff Freedman to the Planning Board. His main research focus is on “renewable energy and atmospheric boundary layer (ABL) processes” so his bias is towards renewable energy virtues. He has no energy sector experience that qualifies him to claim that “renewable energy can reduce costs” He was a spokesman because of his adherence to the narrative.
New York agencies are required to take shareholder comments into account for regulatory actions. Unfortunately, they only go through the motions. Rather than using the process as an opportunity to improve the product it is treated as an obligation. My problem with this is that if anyone provides specific comments or raises specific issues with their work, there is no documentation that the submittal was addressed, and nothing included to respond to the issue raised. For example, the claim that renewable energy can reduce costs was undocumented in Freedman’s presentation. I have no doubts that NYSERDA will continue the charade that renewable energy can reduce costs and that costs of inaction are worse than the costs of action. They have never responded to related issues raised and will continue to do so as long as they can get away with it. In my opinion this is another instance of pathologically politicized expertise by NYSERDA because they are so arrogant that they don’t see any need to respond to stakeholder comments.
Conclusion
The biggest barrier to any net-zero transition away from fossil fuels is the inevitable extraordinary cost of implementation. In New York, the Hochul Administration has ducked the issue since the Climate Act was passed. They can only hide reality for so long. The question is whether the issues associated with the net-zero transition will be addressed before New York’s economy is severely compromised.
In the meantime, if you ever hear anyone say renewable energy can reduce costs, please ask them why German electric prices are so high or to cite an example of any jurisdiction that is transitioning their electric system that has reduced ratepayer bill costs when using the renewable strategy to rely wind, solar, and energy storage resources to power the electric grid.
Roger Caiazza blogs on New York energy and environmental issues at Pragmatic Environmentalist of New York. He has been a practicing meteorologist for nearly 50 years, was a Certified Consulting Meteorologist, and has B.S. and M.S. degrees in meteorology. The opinions expressed in this post do not reflect the position of any of his previous employers or any other organization he has been associated with.
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A Solzhenitsyn paraphrase is appropriate.
’They lie. We know they lie. They know we know they lie. And yet they lie.’
They still lie because it’s lucrative for them in terms of both power and money. And because they know they can get away with it. Governor Hochul is just one prominent example of such people.
But do they know that we know they know we know they lie?
“Renewables are Cheaper Because of Fuel Volatility”
Fossil furls are cheaper because of their reliability. They work.
Fixed it for you
Renewables may not have Direct Fuel pricing volatility, however; they require constantly available spinning reserves that require fuel availability and would still be subjected to price changes.
Every 4GW of renewable generation requires 1GW available back-up Ready Reserve generation usually powered by reliable FF energy. Battery is far too costly at that scale and cannot supply uninterruptible power for days to weeks uninterrupted. Not even for the12-16 hours daily (nightly) that Solar is unavailable.
If you want 1GW of power available, you need 1GW of reliable generation running, regardless of how much renewable is installed and might be running if the wind picks up or the clouds shift.
If I need $2000 a month to live on, I need $2000 a month steady. If there’s enough to spare on a few scratchers and one comes in big, that’s great gravy, but my landlord and grocer won’t take dud scratchers in payment.
Yes and that is also the price that you may have to pay for the backup power.
$2000/MW is quite common in Australia, UK and Germany.
Nothin creates volatile FF prices like Intermittent Supply.
Actually the fossil fuel prices are typically little affected. It’s the price of power that changes, with massive responses related to supply/demand imbalances.
The paradox is that the price paid for renewables is often massively stabilised by subsidies – CFDs that guarantee a price, or other subsidies that guarantee a payment per MWh generated.
Prices with a renewables grid are very volatile. They go low or even negative if they are being paid subsidies when their is a glut that has to be curtailed. They go sky high when renewables fail, and demand has to be curtailed – effectively an infinite price.
Renewables are cheaper ! – if you are only measuring the cost of generation.
However, its total costs that matter
Transmission costs
costs of maintianing frequency
costs of backup
costs of storage
redundancy costs.
Include all the costs and suddenly the cheaper generation costs explode into a vastly more expensive grid.
Cost of replacement, then replacement again, then replacement again.
In the case of wind, the turbines will need to be FULLY replaced at least twice over the average potential lifespan of a CCGT facility and possibly 3 times.
In the case of Solar, the panels and potentially the associated inverters will have to be completely replaced a minimum 3 times with many needing periodic replacement after Hail Storms or strong winds (slightly less than ideal weather).
Both Wind and Solar would require an additional replacement cycle compared to the potential lifespan of Nuclear Generation with each successive replacement becoming far more costly than the prior due to simple inflation.
Add costs of curtailment. These come to be dominant at higher levels of grid penetration.
Indeed. If fuel price volatility is because of demand volatility – then renewable generation volatility generates grid reliability volatility.
Here’s an interesting Google AI response to the question
While renewables are becoming cheaper, some states/countries with high renewable energy adoption may see higher electricity prices due to factors like grid integration costs, intermittency, and the need for backup power, which can increase overall system costs.
Here’s a breakdown of the reasons:
Your AI still missed curtailment for energy that can’t be stored economically or delivered economically to an alternative market.
Renewables are NOT cheaper in the large independent supply organizations (ISOs). All suppliers bid in their prices for supplying MW-hours. The least top bidder sets the price that everyone gets. So even the lowest bidders get the price set by the most expensive accepted bid.
Only some grids operate that way. Where they do, they are open to manipulation. If you own a large wind portfolio and also some dispatchable generation that makes a small margin over fuel cost it will pay you to shut the dispatchable generation down and force the use of much higher cost marginal generation, greatly increasing the price achieved for your wind on days when wind is significant but not in oversupply. This is actually why the system was abandoned in the UK in 2001.
“Renewables are Cheaper Because of Fuel Price Volatility”
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That statement is total horse excrement.
Always look at A-to-Z costs, from mine to hazardous waste landfill
OK, here we go again
HIGH COST/kWh OF W/S SYSTEMS FOISTED ONTO A BRAINWASHED PUBLIC
What is generally not known, the more weather-dependent W/S systems, the less efficient the other, traditional generators, as they inefficiently counteract the increasingly larger ups and downs of W/S output. See URL
https://www.windtaskforce.org/profiles/blogs/fuel-and-co2-reductions-due-to-wind-energy-less-than-claimed
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W/S systems add great cost to the overall delivery of electricity to users; the more W/S systems, the higher the cost/kWh, as proven by the UK and Germany, with the highest electricity rates in Europe, and near-zero, real-growth GDPs
At about 30% W/S, the entire system hits an increasingly thicker concrete wall, operationally and cost wise.
UK and Germany have hit the wall, more and more hours each day.
The cost of electricity delivered to users increased with each additional W/S/B system
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Base-load nuclear, gas and coal, hydro plants are the only rational way forward, plus the additional CO2 is very beneficial for additional flora and fauna growth and increased crop yields to feed hungry people.
https://www.windtaskforce.org/profiles/blogs/we-are-in-a-co2-famine
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Subsidies shift costs from project Owners to ratepayers, taxpayers, government debt:
1) Federal and state tax credits, up to 50% (Community tax credit of 10 percent – Federal tax credit of 30 percent – State tax credit and other incentives of up to 10%);
2) 5-y Accelerated Depreciation write off of the entire project;
3) Loan interest deduction
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The subsidies reduce the owning and operating cost of a project by 50%, which means electricity can be sold at 50% less than it costs to produce.
Utilities pay 15 c/kWh, wholesale, after 50% subsidies, for electricity from fixed offshore wind systems
Utilities pay 18 c/kWh, wholesale, after 50% subsidies, for electricity from floating offshore wind
Utilities pay 12 c/kWh, wholesale, after 50% subsidies, for electricity from larger solar systems
.
Excluded costs, at a future 30% W/S annual penetration on the grid, based on UK and German experience:
– Onshore grid expansion/reinforcement to connect distributed W/S systems, about 2 c/kWh
– A fleet of traditional power plants to quickly counteract W/S variable output, on a less than minute-by-minute basis, 24/7/365, which leads to more Btu/kWh, more CO2/kWh, more cost of about 2 c/kWh
– A fleet of traditional power plants to provide electricity during 1) low-wind periods, 2) high-wind periods, when rotors are locked in place, and 3) low solar periods during mornings, evenings, at night, snow/ice on panels, which leads to more Btu/kWh, more CO2/kWh, more cost of about 2 c/kWh
– Pay W/S system Owners for electricity they could have produced, if not curtailed, about 1 c/kWh
– Importing electricity at high prices, when W/S output is low, 1 c/kWh
– Exporting electricity at low prices, when W/S output is high, 1 c/kWh
– Disassembly on land and at sea, reprocessing and storing at hazardous waste sites, about 2 c/kWh
Some of these values exponentially increase as more W/S systems are added to the grid
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The economic/financial insanity and environmental damage of W/S/Batteries is off the charts.
No wonder Europe’s near-zero, real-growth economy is in such big do-do
That economy has been tied into knots by inane people.
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YOUR tax dollars are building these projects so YOU will have much higher electric bills.
Remove YOUR tax dollars using your vote, and none of these projects would be built, and YOUR electric bills would be lower
.
Comparing Area Requirements of Nuclear, Solar and Wind
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Nuclear plants last 60 to 80 years, solar about 25 y and wind about 20 y
Nuclear plants can be designed to be load following, as in France.
W/S are highly subsidized, grid disturbing, weather-dependent, very expensive, electricity sources
https://www.windtaskforce.org/profiles/blogs/ban-the-dysfunctional-offshore-wind-turbine-fiasco
In other words renewables pricing will always be high and stay high without the instability causing drastically lower pricing in the future. Just the part time, unreliable, free fuel that nature decides to provide sometimes but not other times. You can’t add more Sun to solar panels at night and you can’t add more Wind to Turbines on still days.
Their fuel may be free but it isn’t available on demand.
Their “fuel” may be free, but the cost of creating the vast infrastructure needed to capture it when sporadicly available, then turn it into power that can actually be used by the grid will always be more expensive than their fuel-burning competition that can generate usable power reliably 24/7.
Indeed. Wood, coal, and oil are as free as wind and sunshine — in their natural raw state. It’s converting them to useful materials that takes money.
Interesting fact that no one seems to get when discussing renewables vs. fossil fuel.
The solution to highly variable energy prices, is just to keep prices high all the time. How thoughtful of them.
A “back of a cocktail napkin” estimate from European electric prices v energy sources would indicate a negative correlation with renewable usage.
Up and down because it’s so competitive- and that’s a good thing. Price stability for ruinables? Stable only in the sense that it’s predictably always going up.
Is she crazy or what?
Definitely crazy
She might actually believe the crazy theory that putin/covid/supply chain has caused increased electricity prices, but that is crazy in itself. So either crazy, have crazy beliefs with no actual interest in finding the truth (incredibly irresponsible for a ‘leader’), or is actually duplicitous bordering on evil. People will die because they can’t afford to heat their homes to protect themselves against ‘Global Warming’.
“New York agencies are required to take shareholder comments into account for regulatory actions. Unfortunately, they only go through the motions. ”
I see the same here in Wokeachusetts regarding forestry policies. When they take comments- they usually get several hundred. But I’ve been in the field for half a century. I know exactly what the state honchos want for policies- amazingly, they conclude that their ideas are best, regardless of hundreds of comments going against those ideas. I now tell people don’t even bother sending in comments- focus on helping this state to stop being dominated by Democrats- who make up 95% of the state legislature.
The best guage of cheaper is what consumers pay for electricity. When someone tells me prices are falling for electricity because of renewables, I tell them show me your bills.
They’ll probably happily show you a very low, or even zero bill. Because they have solar panels paid for with your taxes, and their feed-in tariffs are forced on their providers, and paid for by you with higher rates.
Just like EVs, it’s the rich benefiting at the expense of the poor.
Roger, you are far too kind to these punks. Wind and solar do not work, neither can provide the energy we need when we need it. That is not in question. If they were cheaper than fossil fuel and nuclear there would be no need for the massive government support they enjoy, subsidies, grants, tax preferences, environmental forgiveness and preference to the grid. It is all a lie. We could put this whole stinking mess behind us with the stroke of a pen. No mandate that renewables have preference to the grid, no subsidies, grants or tax preferences to any outfit unless the same is available to all outfits, no environmental forgiveness, you are only paid for energy you provide and if you mislead about the energy you can provide your corporate heads will be arrested tried and hopefully jailed for a long long time.
When windmills and solar are added to an electrical grid, you are essentially putting in place more electrical generating capacity than is needed You are in effect doubling your generation capacity for no good reason, and paying for twice as much generation is naturally going to be more expensive.
For every windmill and solar installation there has to be an electricity backup using conventional generating capacity, for when the sun doesn’t shine and the wind doesn’t blow. At those times you must have 100 percent conventional backup generation ready to go. Otherwise, you have a grid blackout.
You need double the required generating capacity to incorporate windmills and solar into the grid.
Windmills and solar are not economically viable without taxpayer subsidies and special, privileged payments, which adds to the costs ratepayers have to pay.
Get rid of the windmills and solar and you will cut your electric bills in half.
Germany and the UK will be the crash test dummies for Net Zero. As their economies crash and burn trying to implement Net Zero, maybe this will be a sufficient wake-up call for New York and other Delusional Net Zero States.
Windmills and Solar are an economic cancer on electrical grids.
Windmills and Solar should be relegated to the Ash heap of history.
Anyone who supports windmills and solar is advocating for increased electric bills. Your CO2 phobia has blinded you to reality.
The price of renewables is far more “volatile” than the price of fuel. The price of renewables goes to infinity when the sun don’t shine or the wind don’t blow (or blows too much).
Imagine the tens of $Billions New York State’s citizens could benefit from if the Democrats would get out of the way of New York’s vast Marcellus Shale gas development.
The IEA recently noted that “high electricity prices continue to undermine the competitiveness of Europe’s energy intensive industries” with “average electricity prices in 2024 still 65% higher than 2019 and still double those in the US and 50% higher than China.”
This was however an improvement since 2022 when those prices were “160% higher than in 2019”
IEA ‘Electricity 2025 Analysis and forecast to 2027’ (Feb 2025)
Of course volatile production would never have anything to do with pricing.
I’ve annotated a long term NG chart with some of the key events marking out volatile responses. It’s interesting to note that the USG market was historically vulnerable to hurricanes, but that since the shale gas revolution that really hasn’t been a factor. Major financial speculation has been responsible for some of the biggest price moves (Amaranth, 2008 financial crisis, arguably part of the 2022 energy crisis). That kind of behaviour is not going to go away just because you use renewables: it may take a slightly different form, and in particular it is likely to lead to conflict between countries and regions. When renewables fail, the price for supply becomes infinite. You don’t get more volatile than that.
So we are back to the nonsense that wind and sunlight are free.