By Vijay Jayaraj
You wake up to an alarm, flick on the light, brew coffee, and drive to work. Every step requires energy – the stuff that shares the coin of physical reality with matter, the E in E = MC2. It keeps homes warm, food fresh and economies running.
Supplying 80% of the world’s primary energy, coal, oil and natural gas make up the lifeblood of modern civilization. Yet, there continue to be calls for the abandonment of these fuels without any feasible, scalable replacement in sight.
It is dishonest for “green” lobbyists to claim that electricity from wind and solar can replace fossil fuels, when currently most of the energy used in the world is not even in the form of electricity.
Electricity represents only about 20% of global final energy consumption. That means four-fifths of the world’s energy use comes from fuels that power ships, planes, trucks and industrial furnaces. Oil fuels vehicles, natural gas provides heat for homes and industry, and coal is critically important for the manufacture of steel from iron.
Demand for hydrocarbons is expected to exceed that of electricity for many decades.
You’ve probably heard it before: “Solar and wind are now cheaper than fossil fuels.” This is a falsehood supported by a misleading metric – the levelized cost of electricity (LCOE). When Mark Twain spoke of “lies, damn lies and statistics,” he had LCOE in mind.
LCOE purports to present an apples-to-apples comparison between various energy sources. However, the measure is meaningless because it ignores key costs such as those of providing backup power to compensate for the intermittency of solar and wind. Something must be available to step up when the wind and sun are not available for power generation.
While it may be true that sunshine and wind are “free,” converting them to a form of energy that works with modern power grids and integrating them into the 24-hour operation of electrical systems supplying millions of customers is difficult and expensive.
A 2022 study by Robert Idel exposes LCOE’s flaws.
First, LCOE assumes constant output, but solar and wind produce only 20%-30% of their designed capacity, compared to 80%-90% for plants running on coal, natural gas or nuclear fuel.
This commentary was first published by RealClearMarkets on July 7, 2025.
Vijay Jayaraj is a Science and Research Associate at the CO₂ Coalition, Fairfax, Virginia. He holds an M.S. in environmental sciences from the University of East Anglia and a postgraduate degree in energy management from Robert Gordon University, both in the U.K., and a bachelor’s in engineering from Anna University, India.
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There is nothing surprising here, CAGW fanatics are liars and cheats. That is what they do.
LCOE isn’t dishonest so much as misapplied. It’s a metric intended to help power companies and power providers assess how much energy from various sources is going to cost (if you’re a distributor) or yield (if you’re a provider). As such, it reflects subsidies/credits and doesn’t include backup costs. No, it is NOT — and is not intended to be — a measure of true costs of electricity.
There’s a similar metric called LACE (Leveled Avoided Cost of Energy) that attempts to figure out what the cost of other sources of electricity would be over the lifetime of a project. If you’re going to invest in a power project, you want the LCOE to be lower than the LACE otherwise you’ll be selling power at a loss or not selling it at all. LACE is presumably a better estimate of actual cost than LCOE, but probably still doesn’t look to be the “real” cost of electricity.
I admit to having difficulty getting my mind around LACE. If you’d like to try, there’s a halfway compressible discussion of LCOE and LACE at https://www.ourworldofenergy.com/vignettes.php?type=electrical-power-generation&id=16
This article has a better take on LCOE
A 2022 study by Robert Idel exposes LCOE’s flaws.
“
Economically, the fact that intermittent generation has no obligation to meet the demand can be seen as a hidden subsidy. One can even go one step further and argue that intermittent generation is of zero value if it cannot be made available to consumers who demand a steady electricity flow. To do that, however, supply and demand on the network must always be in balance. In effect, the ability to schedule other generators to continuously maintain that balance is necessary to give value to renewable output. The dispatchable generators thus raise the value of renewable generation, but the subsidy is “hidden” because the latter does not have to pay for it.”
Adding to my comment – at low penetrations, wind and solar are probably cheaper than fossil fuel
However as renewable penetration increases, the costs of balancing / covering the costs of intermediacy grows exponentially, and the corrected lcoe becomes 3x -4x greater than advertised
It used to be called lifecycle cost of ownership.
And LCO included setup, maintenance, operations, repair and teardown.
Agree that backup costs should be considered. Horse trade? Let’s also consider the coat of oil and gas producers insuring and/or lock boxing for more than a tiny fraction of the 13 $ figures worth of their freely assumed past and present asset retirement obligations. I.e., well plug and abandons, surface restorations, platform removals, sea bed clean ups. No new leases until that’s done. I’ll even throw in losing the current tiny, temporary green start up helps.
Spit on your hand and let’s shake…
WTF? Have you had a few too many tonight?
I thought it was just me. I’ve read it three times and still don’t know what it means. It’s almost as if it’s a Google translation of Klingon.
Asset retirement obligations is the estimated cost of shutting in a non producing well. Every oil and gas producer has accrued an estimated liability for those future costs. Its required by GAAP. Yes its a legitimate cost.
That being said, its not a direct component of lcoe, though indirectly a component of the fuel costs.
However, the biggest flaw in the LCOE computation is that only covers the cost of generation – assuming that all the generation is used. It omits the costs of
Storage,
Redundancy,
I think BigOilyBlob is actually an Absurdist poet at heart.
When you come up with something that actually exists, we can talk.
BOB, that must be a north American situation. Here in Oz, I have P+A’d more wells that I can remember, all at the company’s cost and colleagues have restore leases and pipeline ROW to their natural state, all at the company’s cost. Time will tell if all wind farms and solar farms are restored at their owner’s cost.
I remember the hilarity a while ago when some clown showed a “pristine” area and complained that coal mines left huge scares ..
Turned out that the area in his picture was a rehabilitated coal mine 🙂
Being near a coal area, I actually know a few guys who’s employment is in coal mine rehabilitation.
I had a small coal mining operation start up across from my property some years ago.
I was not happy with the situation. At least the bulldozers only operated in daylight.
They strip mined coal there for about a year and then they stopped operations for some reason.
They restored the land they were mining on, and you could walk across the land now and never know there had been a mining operation going on.
I was Very happy with this outcome. 🙂
Atypical. The plural of anecdote is not data. The data is with me…
Yet somehow you are unable to conjure it up here, must be your runaway imagination taking over!
You were lucky.
Had they been making money, there would a square mile of strip mined land.
I lived (UK) the first 18 years of my life on a top of a coal mine. Apart from the winding gear at the pit head, and a slag heap (later removed) , my village, and other villages, was surrounded by hundreds of square miles of agricultural land – quite a lot of coal mines under it – the area having been mined for about seven hundred years.
That would require a lot of …
Concrete Footing removals with topsoil replacement
Paved road removal and ground restoration
Millions of acres of Forest replanting
I bet none of that concrete holding up wind turbines will ever be removed. I’ve watched a few YouTube videos showing the installation of that concrete. The quantity is mind blowing. It’ll be there for geologic epochs.
Glad to hear that Oz is acting responsibly. So are the Norwegians, in the North Sea.
A modern shale well can easily cost over $400K to plug out, and often into 7 figures. We have hundreds of thousands of them, and increasing every day. And over 3000 GOM platforms that hardly cast a shadow any more. The incremental ROR on keeping skeleton crews on them v plugging them out get run every year during SEC reserves season, and the SEC keeps accepting the silly analyses. The tiny “reserves” are then booked, not because they matter, but as proof to other regulators that the platforms are still economic. Games. Just two example of real oil and gas asset retirement costs, and how they are skirted.
All the trillions wasted on green energy could help restoration of ff sites.
The costs of remediation Wind and Solar installations should be included in the leases.
No new wind turbines until all now dysfunctional ones are fully removed.. including foundations.
Solar panels, wind turbine blades etc must not be dumped in landfill or the ocean.
Watch the cost of junk electricity climb through the roof !!
We all know that coal, gas and oil companies CARE much more for the planet that any wind or solar grifter does.
Then let’s also consider the “Asset Retirement” of Wind and Solar where Blades are not recycled or recyclable and dumped in huge landfills every 15-20 years and huge concrete footings are left in the ground.
Then the Solar Panels which are also not recycled but dumped in landfill with every wind or hail storm and contain various toxic heavy metals like Lead and/or Cadmium which can leach into the environment.
Wind and solar manufacturing are very yucky processes, using lots of highly toxic chemicals.
Sludge lake of acids from solar cell manufacturing and refining neodymium for magnet are huge and increasing and are destroying large areas of once productive farmland.
And as you say, a lot of the components cannot be recycled except at extreme expense.. so they are sent to land fill, causing habitat destruction, while also leaching toxic pollutants into the soil.
Turbine blades are mostly silica. I.e., sand. Yes, they will be landfilled. All told, green asset retirements will be a fraction/kwh produced of those for oil and gas. And also unlike them, they will actually happen. The value in green sites is not finite and subterranean. So, well sited projects will continue to be kept up, pretty much into perpetuity, or until the elusive SMR’s and actual long term nuc waste storage occurs, whichever comes first.
FYI, from Africa to South America, to the FSU, to the US, the world is replete with open sore, old oil and gas projects that have no set asides for retirement.
What will be the cost to remove the concrete foundations for a wind turbine?
High. AI says from $100-400K per. Which is why they will be repaired and reused AMAP. AGAIN, the value of green sites is in the functionally eternal energy that comes with them, not the bat of an eye depletable resource under foot. “Asset retirement” for well sited green projects will be ongoing, until either we get those Big Foot SMR’s and real long term nuc waste storage, or into perpetuity, whichever comes first.
Funny you should say that. In Cornwall, my present abode, there are dozens of defunct wind turbines. Some have been out of use for a decade, yet nothing gets done. At most, the blades get removed before they fall on someone, but the pylons and bases are left to deteriorate slowly. I have never once seen a dead wind turbine dismantled to be replaced by a new one.
They won’t be.
Probably enormous, which is why it happens so rarely, if ever.
Funny you should say that. I live in Cornwall, where there are dozens of defunct wind turbines. There they stand, deteriorating slowly in the salty air. Occasionally, the blades get removed before they fall on someone, but the pylons and bases are simply abandoned. I have never seen a dead wind turbine dismantled, let alone one replaced by a new installation.
Then add in the cost of recycling dead turbines and solar panels. What’s that you say, they can’t be recycled?!? You’re just going to bury them?
Does not compute.
Bob,
back up costs are only one of many costs that using wind and solar extensively incur.
In the U.K., wind and solar are more expensive per Mwatt Hour than gas, our primary balancing source of generation. (Balancing cost is another that renewables incur)
I have no reason to believe other countries are any different.
The UK has a fraction of the wind and solar potential of much of the rest of the world.
False and in any case irrelevant.
Reading your post the only thing I shake is my head…
Lots of anecdotes and data free responses, but nobody spit in their hand.
The lowest LCOE Texas projects into the future would feature wind, solar, natural gas backup. Amazing to me how those who pimp natural gas as a primary source, eschew it as backup. Properly installed, it’s the best – which is why ERCOT has studied the situation at least twice and came to the same conslusion.
Beyond ignoring the cost of providing backup, there’s also the fact that the frauds who push this garbage also assume that wind and solar facilities will last the same length of time as fossil fuel plants and won’t suffer any degradation as they age.
Not only do they degrade faster but they are also easily damaged by unfavorable weather
Vijay, “solar and wind produce only 20%-30% of their designed capacity”. In Oz last year’s wind drought had wind producing as low 4%-5% at 6am (i.e. night-time) for days on end. As an engineer I always designed for worst case.
IEE Japan did a study on how much it would cost to implement Variable Renewable Energy into the VietNam grid system.
Even without including several significant costs, the total cost was ridiculous, FAR more than the cost of Coal and Gas.
Every step you take, every move you make, generates heat, as well.
More people generate more heat just by being alive, and lots and lots more to stay alive and comfortable.
Some people are surprised that thermometers here, there, and everywhere, respond to increased heat by getting hotter!
Silly people – they should learn some basic physics. Otherwise, they might stay ignorant, and be gullible enough to believe that adding CO2 to air makes it hotter! How ridiculous is that?
And Solar and Wind are comparatively short lived relative to FF generation
Gas Generation lasts upwards of 60 years with maintenance
Nuclear can last up to 80 years if properly maintained
Solar lasts about 15 years at best and would need to be replaced a minimum of 4-6 times relative to Gas or Nuclear at successively higher replacement costs from inflation. Solar is also relatively fragile and would more than likely not need regularly scheduled replacement as annual storms would cause the need.
Wind lasts about 20 years and would require replacement 3-4 times relative to Gas or Nuclear again at successively higher costs from inflation. Wind is also susceptible to storm damage from High Winds and could require replacement yearly from storm damage
Modern offshore wind turbines can contain over 30,000 components. Denmark found that up to 60% of their offshore turbines failed within 5 years. Modern offshore turbines are also much larger than earlier ones and are proving to be not as reliable as their smaller cousins.
Denmark also invited tenders for their largest ever offshore windfarm towards the end of 2024 and have not received a single bidder.
There is an ongoing false comparison being made by the renewables lobbyists regarding the cost of energy.
They claim solar and wind are free thus will lower the cost of energy to the consumer?
I would contend, coal, oil and gas are also free. Those energy options are there free for the taking.
So we can conclude the basic cost of the energy at source whether fossil fuel or renewable is the same.
That just leaves us to consider the various costs to get the free energy sources to the end user
Clearly environmental concerns and damage plus safety must come into play too.
When we look at the options renewables fail to deliver on several key issues.
Looking at the fossil fuel/reliable list of characteristics we have.
The real question is, why after all these years are we still having this debate?
Good one, Rod. That was exactly my thought when i read the bromide, wind and solar are free.”
Hogwash!
Levilized cost ignores a an important fact about “renewables”. Take solar as the easy case. The cost of energy is expressed in the units of $/KWh. Electricity from a solar panel is very cheap at noon. At midnight it is $/0 which is called by mathematicians undefined. You can’t average over the undefined. Levilized cost pretends that night time does not exist so that it can average. That is cheating and the number it produces is bogus.
Actually the nighttime case is not $/0. There are no transactions and the price is 0/0 which is also undefined. Averaging with rational numbers produced in daytime hours is not legal.
I am surprised that no one recognises that electricity is NOT ENERGY. It is merely the mechanism we use to transport energy from one form or place to another form or place.
This is fundamental to the problem of replacing fossil fuels which ARE energy in a compact and transportable form.
This is why Net Zero is a futile dream.
Great article.. It’s about time there was push back on the lies being told and “justified” by LCOE comparison. Bring it on.. Lets see more decent debate on actual full costs of trying to replace a fossil fuel centric system with a “renewables only/majority”one. NO contest.
One other cost item that is seldom addressed is the far greater cost of connecting the unreliables into a network. For Instance, Transmission lines need to be sized on their peak capacity, but are ultimately paid for by the total amount of power they transmit into the network. A fossil fuels or nuclear fueled generator base generator will be pushing power into their connection lines for something like 80-90% of time and so the average utilization rate of the connecting transmission line is VERY high. Contrast that with transmission lines that connect solar, They too, must be sized on possible peak, but very rarely reach that, instead, for at least 50% of the time, they are dormant and average much much less than fossil/nuclear fueled generators. They only peak for a few hours, for a few days per year. Wind is similar, VERY UNDER utilized. Yes, peaker plants also are utilized less, BUT, they serve a specific purpose, AND can be relied on to provide power at those peak times. Generally their connection links are much shorter also. Bottom line, transmission costs are a MAJOR factor in determining costs of power DELIVERED to the consumer and the approx 4X costs of connecting unreliables into the network quickly adds to driving UP power costs to the consumer.. LCOE must be DITCHED in favor of more ACCURATE ways of determining TOTAL costs of DELIVERED power to Consumers.
A pity the head post is truncated, but what’s even more of a pity is that the linked article is paywalled. It does appear from the excerpts that are available to be one of the few accounting literate accounts of the method.
Basically with LCOE you leave out the costs of making the generated power usable – the additional transmission and replacement generating capacity required to cover calms, nights and high latitude winters. This lowers the NPV of the cost side.
Then you count all the power generated over the life of the system, using the capacity factor.. This assumes that all power generated is of the same value. So you include power generated when there is no demand, like when there are strong winds in the middle of the night. This is wrong of course, it overstates production.
These are the two main costs of intermittency – the fact that sometimes when there is demand, there is no production, and the fact that sometimes, when there is high production, there is no demand, and the fact that even to get the power to where it is needed, you incur lots of transmission costs.
Now you move to division. You take the understated NPV of costs and divide it by the overstated total production, and this gives you a cost per unit, MWh. Since production has been overstated and costs understated this number is way too low. But its used to claim lower cost for renewables than for conventional or nuclear.
All this is very familiar to anyone who has dealt with investment appraisal at large Western corporations. The temptation and the tactics are the same. The analogy to overstating production is stuffing the channel – shipping goods into the channel for which there is not retail demand, and booking the shipments as revenue. Leaving out or underestimating costs is also common, though not usually as obvious as the way the LCOE advocates do it.
Another way to look at it is that LCOE as usually reported invites us to compare two investment alternatives which deliver completely different products as if they were the same: one delivers intermittent weather dependent energy at a location where there is no demand, the other delivers reliable and dispatchable energy where its needed.
Do this kind of thing in front of the Finance Committee of any large Western Corporation, and you get shown the door. Do it in your accounts, your shares will be suspended and you will to jail for accounting fraud.
In 2024 Lazard finally admitted that their LCOE did not include the cost required to provide power when there was not enough wind or sun to meet demand. They also assume a dubious 20 year life for new gas plants when 30-40 years is the case.
Yet people like Nick S still rely on their outdated definition. Paul Jostrow from MIT ,however, calls Lazard’s LCOE “simplistic calculations”
LCOE in the UK going back to the 1960s (when utilites were State owned and run), was used to compare the cost of then nuclear, coal, gas – which were comparable – to see which was most cost efficient to provide additional capacity with respect to anticipated increasing demand. In other words what will the next power station be, nuclear, coal or gas?
It was not intended to be used to assess replacing existing generation with another form which is how it is being used by the Net Zeroids loonies, and with non-comparable generators.