By Vijay Jayaraj
Those claiming that wind and solar energy are cheaper than fossil fuels should be writing scripts for science fiction dramas.
Yet global organizations such as investment firm Lazard and the International Renewable Energy Agency expect this bogus claim to be taken seriously as a basis for investing many billions into essentially useless technologies to save the planet from a made-up climate crisis.
The metric used to perpetuate the wind and solar fantasy is the levelized cost of electricity (LCOE), a deeply flawed tool that masks the real costs of these energy sources whose ability to perform is subject to the weather and time of day.
Designed to deceive, LCOE creates a mirage that has seduced many a foolhardy policymaker. LCOE takes the total lifetime cost of building and operating a power plant and divides it by the amount of electricity it will generate. This gives a cost per megawatt-hour that can be compared across technologies. But there’s a catch – actually, several.
By ignoring critical factors like reliability, infrastructure and subsidies, LCOE paints a deceptively rosy picture, leaving consumers footing a far higher bill than advertised.
LCOE treats all electricity as equal. A kilowatt-hour produced at 2 a.m. is valued the same as one at 9 a.m., even though demand and value are vastly different at these times. In real life, electricity at peak demand is far more valuable than off-peak power.
Traditional power plants, like gas and coal, can ramp up to supply electricity when it’s needed most. Wind and solar lack this fundamental capability. Their output is a gamble on the availability of sunlight and wind.
Wind and solar need backup sources of electricity such as natural gas-fired plants that run in standby mode or massive battery banks that store excess energy for later use. LCOE pretends this very significant cost does not exist.
The more renewables added to the grid, the worse this problem becomes. That’s why Germany, despite spending hundreds of billions on wind and solar, still relies on coal and imported power. LCOE estimates never warned of the grid instability, power curtailments and price spikes that followed.
Both offshore and onshore wind installations are typically in remote locations far from population centers needing the power. The high-voltage transmission systems and underwater cables required to move the electricity are additional costs not recognized by LCOE.
Because the electricity produced by wind and solar is distinctly different than what comes from spinning turbine-generators, additional equipment is needed to maintain operational balance in the power grid. These billion-dollar upgrades – you guessed it – are not counted by LCOE.
Experts now advocate the levelized full system cost of electricity (LFSCOE) as a truer measure of effectiveness in electricity production. This adds in the system-wide costs of transmission, storage, curtailment, and backup. The result? Wind and solar no longer look cheap.
A 2022 study in the journal Energy found that LFSCOE for power grids with a high percentage of wind and solar sources could be two to three times higher than LCOE estimates, especially in regions with variable weather. For example, while LCOE might peg solar at $40/MWh in a sunny region, LFSCOE reveals a true cost closer to $120/MWh once storage and grid costs are included.
But don’t expect these metrics to be adopted by advocates of “green” energy anytime soon. LCOE’s simplicity – despite its flaws – makes it useful for headlines and lobbying. Irony hit stratospheric levels when the same people claiming that “solar and wind are cheaper than fossil fuels” demanded hundreds of billions of dollars in subsidies under the “Inflation Reduction Act” for this supposedly “cheap energy.”
How can such “cheap” technology require this much public money? And if they’ve been in the market for more than 30 years, are wind and solar still “emerging” technologies? Or are they now part of an entrenched system that benefits from political favoritism and economic distortion? The answers are obvious but ignored.
As energy analyst Alex Epstein testified in the U.S. Congress, the U.S. Federal Energy Regulatory Commission should “require solar and wind generators to bear the full costs of the backup, storage, and transmission they need to provide reliable electricity. This will end the unfair practice of socializing the costs of intermittent generation across ratepayers or the grid.”
LCOE is a flawed tool, one that might have worked when comparing steady-output power plants. But for intermittent renewables, it’s a square peg in a round hole. It’s time to retire this broken metric. More comprehensive cost assessments – like LFSCOE – must take its place. Until then, public debates will continue to be skewed, and consumers will keep paying for a lie.
This commentary was first published by Real Clear Markets on July 29, 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.
Or the “renewables” advocates will pull out of their nether regions the “social cost of carbon” , and add that to the measurable costs of conventional fueled sources. So clearly wind and solar are superior!
What’s a little extra Plant Food to the Biome??? Welcomed!!!
““social cost of carbon””
The contribution of carbon based fuels to modern society is HUGE, IMMENSE.. probably immeasurably so.
Modern civilisations were built by it, and basically everything in modern society depends on carbon based fuels and their by-products.
so we should add the social benefit of carbon!
Carbon, not CO2.
’nuff said.
“social cost of carbon” is about the cost of a graphic (aka lead) pencil.
And they’ll lie about the millions of jobs to be created by ruinables.
They are already doing that in the UK by including jobs that would exist regardless of Net Zero such as bin men – as if we would leave piles of rotting rubbish around uncollected other than Birmingham of course. All sorts of non-output greenie pen pushers are included. A certain amount of useful recycling would go on as some things have value – copper, lead, aluminium etc. Of course the few genuine jobs are massively dwarfed by the huge loss in real jobs in manufacturing, petro-chemicals, oil and gas etc.
Excellent explanation of the real facts…should be essential reading for every politician and/or policy maker. But they don’t want to know…
Politicians want to get elected and then re-elected. Politicians will say and do anything to get this to happen. Politicians have even been known to switch political parties for this to happen, which shows that their interpretation of basic principles can be sacrificed for election results.
LFSCOE is generally a modeling construct to estimate the total cost of running a grid on one energy source, fully firmed. It helps reveal hidden system costs omitted by LCOE, but it’s not a realistic reflection of modern diversified power systems that integrate renewables in balanced portfolios.
…it’s not a realistic reflection of modern diversified power systems that integrate renewables in balanced portfolios.
This is complete nonsense. There is no such thing as a ‘balanced portfolio’ or ‘integration’.
The way you assess adding renewables to a system is no different from the way you assess the financials of any investment project, you do proper NPV analysis. Read any corporate finance textbook for an explanation of how to do it.
Anything but actually addressing the point.
The point being that economically, weather dependent electrical generation costs cannot be forecast because there are a severe shortage of soothsayers that can actually predict the weather.
Of course that is not the point at all, just more blathering.
There already are many words in existence that prove my point, such as windless, doldrums, calm, breezeless, tranquil, balmy, foggy, cloudy, overcast, hazy, gloomy, dreary, etc, etc, etc. The list goes on and they all weren’t invented yesterday.
It also turns out that no one can predict future weather either, a point that you continually ignore.
That’s funny, coming from Alan.
Only one explanation comes to mind, bollocks.
The problem is that if you need 50 gigawatts of power, you can build nuclear or fossil fuel plants to meet that need. You can add 20 gigawatts of wind and solar, but you still need 50 gigawatts of reliable power to cover when the sun doesn’t shine and the wind doesn’t blow. We don’t want unreliable electricity so all the wind and solar require 100% back-up. That makes them more expensive. Ignoring that cost and the cost of destabilizing the grid is a deliberate deception.
Nonsense. We don’t need 100% fossil or nuclear backup for wind and solar. Modern grids rely on a mix of resources like storage, demand response, hydro, and geographic diversity to maintain reliability. The idea that renewables require full duplication by fossil fuels ignores decades of progress in grid integration and falsely assumes wind and solar contribute nothing to system reliability, which simply isn’t true.
Never eat more than 500 hits of LSD at one time.
As usual, Alan imagines a perfect world that never existed and insists that should be the world are analysis should use.
Modern grids strive for reliability in spite of storage, demand response, hydro, and geographic diversity.
Again, you have it backwards.
Definitely you lack expertise in engineering, especially power systems engineering.
“LFSCOE is generally a modeling construct to estimate the total cost of running a grid on one energy source, fully firmed. It helps reveal hidden system costs omitted by LCOE, but it’s not a realistic reflection of modern diversified power systems that integrate renewables in balanced portfolios.”
On first read that sounds like a valid statement.
It, however, misses the point addressed in the article.
LCOE is being used extensively to demonize steam turbine generators fueled by coal and hydrocarbons, claiming the SV and WTG are so much cheaper that steam turbine generators need to be shut down and the cost of electricity will go down, way down.
Given the goal is to eliminate steam turbine generators (aka achieve Net Zero), there is no modern, diversified power systems.
In the past we used Total Cost of Ownership. One could do a KWh/US$ based on that, which is the essence of LFSCOE.
Applying the principals of LSFCOE to WTG and SV reveals that the cost/KWh is much higher and reverses the argument based on reality.
The only things “Cheap” about Wind and Solar is their free fuel that isn’t available when needed most but only when weather dictates … and you can’t add more when needed, And their inherent quality given their propensity to be far shorter lived and lack of fortitude to withstand that same inclement weather.
Wind and Solar need to be replaced (respectively) 3-4 times more often than Gas Generation Power Plants and 4-6 times more often that Nuclear Generation Power Plants … as well as after hail storms and strong wind storms. They’re far more likely to be damaged in the very weather they are supposed to mitigate. So Construction and maintenance over the lifespan of conventional Gas and Nuclear Power is easily 4-6 times more costly.
Then there’s that other nagging issue…Capacity Factor.
Wind’s capacity factor, relative to Gas Generation means that you need to install twice the MW of wind to equal the MW output of Gas and 3 times the capacity to equal Nuclear potential output.
Then there’s availability during Peak Demand. The overcapacity necessary to equal either Gas or Nuclear (even Coal) cannot guarantee available capacity at demand and MUST be stored (Battery or Pumped Storage) until needed to stop overcapacity or undercapacity from destabilizing the grid.
Capacity factor is very misleading. Much of the capacity is not available when needed. Solar is by far the worst. Never available at peak demand. Gone in the winter. Storage is an expensive fantasy.
No. Fiction has to sound plausible.
+10
“Experts now advocate the levelized full system cost of electricity (LFSCOE)”
No, they don’t. One author, Robert Idel, of the Baker Insitiute, Houston, has written about it. There is virtually nothing else in regular scientific papers. He alone has produced the various LESCOE numbers quoted here.
Nick,
If Robert has just one other expert that agrees with him, then you are wrong. It would seem to me that you are on very thin ice here.
OK, produce one.
If I said me, then you are wrong.
See how easy this is.
You are wrong.
Mr. Ian: Well done!
Nick wont be replying to this post. See how easy this is?
Day 2, and still waiting.
Victoria, the COAL state, current using 75% BROWN COAL and importing from NSW !!
SA using 55% gas
Not going to be much roof-top solar in NSW and Victoria today !
So basically if All they had were Wind and Solar RUINABLES as their supply they’d be RUINED
All the states are running on FF except Tasmania (Hydro) and so you ask how does any sane person think we could replace FF generation with renewables. You need at least cover at least 60% of generation in every state.
So lets ask Nick how he thinks will work going forward?
Wrong-O, Nick! LCOE and LFSCOE are economic and electric system engineering and operations issues, not scientific. Science (I assume you mean CliSciFi) writers are not qualified to opine on those issues.
Ok Nick, if LFSCOE is so bad, it should be easy for you to point out it’s flaws.
It always amazes me when scientists don’t see the value of listening to engineers. After all, rocket science isn’t that difficult. Rocket engineering is, however.
Engineers actually make stuff work, instead of just talking about it!
https://createdigital.org.au/an-engineers-opinion-is-invaluable/
Backing this up…
And, very appropriately:
My dad (bless his soul) was an engineer. He always told me it was the technicians that actually make stuff work, especially the oldest ones with the most experience and least education (formal, anyway).
Old story/joke:
One night, a vital piece of equipment at the plant stopped working. Nobody in the plant could figure out what to do.
Somebody in the back called out that “Marty could always get that thing running again. Where’s Marty, the manager asked? He retired 2 months ago, came the reply. Someone find Marty, the Manager cried out, we’ll pay him whatever he asks.
A few hours later Marty arrives, asks a few questions, thinks for a few minutes.
He walks up to the balky machine, finds the biggest hammer in the tool shed. Takes careful aim and whacks the machine as hard as he could. Immediately the machine chugs back to life.
The manager is elated, how much do we owe you, he asks Marty. $1000 was the quick reply. The manager is shocked, but he’s reminded that they did promise to pay Marty whatever he asked. So little taken aback, the manager agrees, but he does ask Marty to itemize the charges.
The next day Marty arrives and hands a sheet of paper to the Manager’s secretary. It read.
Applying hammer: $1
Knowing where to apply hammer: $999
Total: $1000
Very similar to my uncles story about a hydro generator not working. He masked an X on a panel and stated the fault was behind the panel.
His charges? $400 for time spend and $9,600 for knowing where to put the X. This was decades ago.
I am a Rocket Engineer.
Some prefer Rocket Scientist.
And Rocket science isn’t all that easy. You can trust me on this. I live it day by day.
Engineers take responsibility when a design does not work, to add to your comment. We figure out the root cause and fix it so it does not happen again.
Sadly perfection is unobtainium (a term in use prior to the movies, The Core and Avatar). Things fail.
Why would specialized electricity generation & distribution systems need “scientific papers”?
Talk about not staying in your lane.
This requires the expertise & experience of real-world engineers & financing gurus, not imaginary weather modelers.
You don’t need any special measure or way of calculating the cost effectiveness of renewables, either stand alone or as additions. You just do NPV analysis. The method and criteria are the same as for any investment proposal.
Wind and solar energy are TOTALLY FREE … harvesting it costs a bucket load.
They are also the most environmentally destructive sources of electricity at every stage of the short existence.
All energy is free, for the same reason. The earth does not charge. The cost is in making it useful.
The cost is this imaginary game of printing paper pictures of dignitaries with numbers next to their faces to keep score.
Yes, a good clear summary of most of the problems with LCOE, which in any other context would be properly judged to be accounting fraud.
One point which perhaps isn’t made as clearly as it could be is the question of how much power is produced.
LCOE takes the total lifetime cost of building and operating a power plant and divides it by the amount of electricity it will generate. This gives a cost per megawatt-hour that can be compared across technologies. ….
….LCOE treats all electricity as equal. A kilowatt-hour produced at 2 a.m. is valued the same as one at 9 a.m., even though demand and value are vastly different at these times. In real life, electricity at peak demand is far more valuable than off-peak power.
Yes. But there’s another problem, if the power is produced when there is no demand and its not saleable, you should not include it in the amount produced and you should not use it to calculate the average cost per MWh or the capacity factor.
An analogy would be, imagine you have a production line which has to produce perishable goods on a constant basis. But demand fluctuates. You calculate your average cost of goods sold by dividing by all the goods produced, and price and report profits accordingly.
But half your production is wasted and simply goes straight into trash because its unsaleable, having been produced when there is no demand.
This is what using total power generated as the divisor.does. It is the equivalent of assuming that unsaleable product has value. In business if you did this, you would encounter inventory write-downs. Here what happens is you understate the cost, because you are basing costs of MWh sold on the basis of costs of MWh sold plus MWh unsaleable.
Doing it correctly will raise the cost per MWh and will also lower the capacity factor. Do what LCOE as usually practiced does in business and if you report earnings using such a method you would be be committing accounting fraud. Except that in the LCOE case, no-one uses it to determine cost of goods sold, its only (fraudulently) used in political and ideological arguments about how wind and solar compare to gas and coal. So its practitioners are never confronted with the need for corrective write-offs.
One other thing – the piece refers to ‘backup’. That is a wrong characterization of what is happening. What’s really happening is that a conventional plus nuclear plant is being supplemented by wind and solar. Not the other way around. Its important to use accurate language in describing what is happening.
Countries are in fact running hybrid systems, with mainly conventional basic production, supplemented by large amounts of wind and solar. This should be recognized, and then the whole basis of doing business cases changes. Its not, wind and solar are cheaper, but need backup. Its that we have adequate conventional capacity, now does it make sense to add wind and solar to it? And if so, how much, and at what cost?
Really important. The task is not to justify and cost the alleged gas backup. The task is to justify why, if you have a functioning conventional grid, you should be adding wind and solar to it at all.
You’re absolutely right, BUT you have obviously forgotten…we have to save the planet! Nothing else matters…don’t you understand???
I know, right?
Unfortunately, the phrase “We had to destroy the planet in order to save it.” will never be heard. Because there’ll be nobody to hear or even utter it.
Alastair,
wind and solar cannot ‘save the planet’, the obvious one that qualifies and is generally available is nuclear.
Why is that so difficult for ‘planet savers’ to understand?
But, but…. Batteries!
(ignoring yet more data that demonstrates the requirement is impossible to meet with current technology and global resources. )
They want the consumer to pay for domestic batteries because grid scale is too expensive and dangerous. Just shifting the cost and risk to the consumer.
The real problem is batteries are electro chemical energy sources. There is a limit to what chemistry can create in terms of ions and or free electrons.
“Yes. But there’s another problem, if the power is produced when there is no demand and its not saleable, ”
— Indeed, negative ricing says it all. You have to pay another utility to take that energy. It should added in to the calculation as negative.
The cost of generation should be an easy metric.
If during a TYPICAL day, 100 units of energy are consumed, 30 in the morning peak, 30 in the evening peak, 30 spread out through the day and 10 spread out over night.
Then using the typical production output of the generator, show HOW much each of these portions cost to produce. Add the costs per portion and you receive a COST PER TYPICAL DAY for the generator.
Obviously for solar, it will not be able to supply the night time spread. So it MUST have battery backup to cover this omission or it is excluded from the grid. Same for the morning and evening peaks, which often occur before the sun is doing it’s thing.
For the windmills, it will be obvious that they lack the ability to provide anything on numerous days. So again, provide backup or exclude them.
And that’s why we WANT reliable power, hydro is good, coal is good, nuclear is good, gas is good.
Averages are not how you design, nor cost, a nationwide power grid. Anyone claiming that you can should buy the average clothes off the rack. Love the shoes.
No, this isn’t how you cost renewables. You need to take account of capital and current costs over the life of the installation, and allow for the time value of money. Its called Net Present Value Analysis, and its being done all over the world as we speak in business cases being prepared for Finance Committees… Get Brealey and Myers for how-to.
NPV, and derivatives of it, is the only way to compare investment alternatives .
Not the only way, but absolutely a necessary component of any analysis.
WIndmills and solar factories should be used to capture the ‘free’ energy and they should place this into large storage batteries, (at their own cost).
This energy can then be used to supply only the peaks in the daily demand curve, allowing the larger plants, (nuclear, coal and combined cycle gas), to be run at their most optimum settings.
Now that would make sense.
But guess what the windmills and solar factories are actually doing.
“Subsidies” is what makes renewables ‘cheap’: lots of poor people giving a little bit of money through taxes, to rich corporations. Leftists and capitalists claim this is ‘no different’ to the subsidies that are given to oil corporations. What they deliberately and dishonestly overlook, is that that not taking money away from someone is not a subsidy – does all profit belong to the State? – whereas giving someone taxpayers money certainly is a subsidy.
Typical propaganda move. Keep repeating the lie often enough and eventually people believe it.
Schernikau and Smith decisively exposed the fallacy of the LCOE by rolling out the full cost and the energy return on investment to explain that wind and solar are “energy thieves”, parasites, living on the more efficient conventional sources of power.
https://rafechampion.substack.com/p/wind-and-solar-the-energy-thieves-a0c?r=5c3gj
A state (like South Australia) or country where the energy supply is moving towards domination by wind and solar will eventually suffer from energy starvation and it will have to depend on more efficient sources of power, at home or abroad. South Australia imports coal power practically every night, despite burning gas.
Australia depends on coal power in China to make the energy-intensive components of our imported wind turbines and solar panels.
They write:
The wind and solar based ‘energy transition’ can only reduce global net energy efficiencies because it requires more complex energy systems and increase storage conversion and transmission losses.
Looking forward they see no future for the Net Zero program due to the energy efficiency problem and other shortcomings including the short lifetime of the equipment and the astronomical demand for minerals.
https://rafechampion.substack.com/p/wind-and-solar-the-energy-thieves-a0c?r=5c3gj
Drop LCOE and The Blob’s bought boffins will have to come up with another way to put their hand on the scales.
I would agree there are places on earth and places in the United States and other global locations where prevailing sunshine and wind conditions lead to favorable conditions to encourage these alternative energy investments. The Texas Panhandle region, e.g., Amarillo, Lubbock, El Paso are both very sunny and usually blowing winds. Cities like Phoenix and Las Vegas are very sunny. Certain parts of Texas e.g., the Panhandle have a strong combination of combined d the way. Makes sense at least to me to encourage investment, e.g., offering incentives to those regions. Mandating alternative energy in any region makes no sense at all. Once you start doing that (as we have been doing) is stupid, makes no sense and will be highly likely to fail. Someone mentioned the Cost of Carbon … when I studied what has been going on they are absolutely making up numbers and should be ashamed… no credibility at all.
Have a look at the Texas ERCOT dashboard and see how often there is very little wind overnight, hence hardly any RE. https://www.gridstatus.io/live/ercot
Currently, conventional power is providing 86% of demand, wind 13%, and solar 0.
The wind and solar system is only as good as the most demanding scenario that can happen, like windless nights!
RE can displace coal but not replace it:)
https://www.flickerpower.com/index.php/search/categories/renewables/21-7-intermittent-solar-and-wind-power-can-displace-coal-but-cannot-replace-it
The irony is a mistaken assumption that increasing CO2 contributes significantly to climate change. This graph falsifies the Alarmist assumption that water vapor increase is feedback from temperature increase caused by CO2 increase. It shows that measured average global water vapor increase is more than twice as much as the maximum possible average global water vapor increase calculated from just average global temperature increase. This compares data thru 2024 and extends Fig 7.2 in the engineering/science analysis available at https://watervaporandwarming.blogspot.com
Water vapor trend has been increasing about 1.5 % per decade as a result of:
World population increase which is still rapidly increasing, especially in desert areas with their modern mist-makers, swamp coolers, artificial lakes and irrigation adding to average global water vapor. Much of the measured average global WV increase results from increase in average residence time required for the added WV to drift from where it evaporated to where it condenses.
Fascinating. So many the alternative of the Texas flood was not climate change, but things like watering the lawns and a host of other things that increase atmospheric water vapor.
The renewables generators want the consumer to shoulder the exorbitant cost of domestic battery systems to shore up their intermittent wind and solar generators in order to provide uninterrupted supply.
Except battery systems can not reliably provide uninterrupted supply, especially when aging and temperature effects are included.
The key? Voltage turn-on delay.
I can’t help but think of renewables in terms of the military. If a soldier cannot rely on a bullet to fire when he pulls the trigger, then that weapon and ammo are practically worthless. The US military has paid big bucks for reliability. As a retired career aerospace engineer, I know this very personally. I saw it in the requirements for aircraft, weapon systems, reconnaissance systems, launch systems, computing systems – you name it. All of it came with a reliability requirement with exhaustive testing under all kinds of environments.
How we have come to accept power only when the sun shines or the wind blows is beyond me. Unreliable power is worthless. Subsidies made that clear, showing that no one was willing to pay for unreliable power unless it was subsidized up the yahoo. Only Climatistas, Enemies of the State (any state, not just the US) and useful idiots (especially politicians, but I repeat myself) could think otherwise.
Hm. Got that off my chest.
F-16s for me. Engineering systems requirements back in the 1980s drove the avionics designs.
You are spot on.
LCOE back in the 1960s (UK) was used to compare the three dispatchable sources, coal, gas and nuclear and was intended to help decide which would be best to add extra future capacity, not to replace one type of generator with another which is how it is being used for wind and solar.
And because each type could provide continuous, dispatchable output to match supply with demand, there were no external costs such as back-up systems, or grid balancing costs, or added costs to build more transmission lines to connect intermittent sources distant from points of consumption.
This article misses the critical factor of LCOE- the most important of all.
The other arguments are relevant but much less important.
Lazard designed LCOE for rent seekers. What does that mean, you might ask?
It means, simply and distilled down. renewable energy projects are valued only for the discount period, typically 15 years, and profits (rents) are guaranteed by the government.
The purveyor cannot lose. Clever, no?
Think about what that means for renewable energy projects!
FCOE, full cost of energy (electricity), the correct metric, represents the actual cost versus energy production for the full operational life of an energy system.
That would make practical sense, right? Not to Lazard.
Simply only allowing guaranteed 24/7 output onto the grid will kill the unreliables immediately. In N Australia a single cloud coming across collapsed a solar based grid and so scared the grid managers that they faced criminal actions if it happened again that they blocked a solar farm from connected if they could not deliver 24/7. As they had no budget for this the solar panels sit gathering dust and unconnected.