It seems like there is relatively little discussion of biomass(specificially within the context of burning wood to generate electricity).
In the US the states with over 50-60% of there electricity from wind still have some of the lowest electricity rates for both industrial and household use.
It is true that renewables need more batteries and transmission to even things out, but they also have less price variability than gas (2022 spike). New renewables have cheaper cost profiles than older version of the tech, to such a degree that there are solid papers arguing that solar may be the cheapest energy source in basically every country by 2030.
I wonder how this analysis would look looking at the US for wind penetration. Production is actually often a much smaller part of rates than transmission, meaning that the differences between natural gas and wind are less salient than the delivery and subsidy to biomass.
If wind were truly a more expensive technology than everything else why would countries pick it? Also this ignores taller turbines driving prices down a lot (more swept area of turbines and winds are more consistent as well as faster in taller spots)
One of the issues with fossil fuels is that the fuel isn't that effective, so one cannot so easily store a few years worth of it (buy when price is low, use when price is high). With nuclear energy, this problem is resolved too
But for nuclear, fuel costs only tiny fraction of expenses, so this comparison doesn't fly. You still need to pay salaries to personnel even if plants are operating at low capacity.
You are not seriously asking why countries would implement it if it were more expensive? In Europe at least this was driven by pure ideology.
Also, it is often not more expensive at a project level, but at a system level, because it does not in fact replace 1 for 1 the gas it is generally compared to (or nuclear or hydro).
Claims that renewables are becoming cost-competititve with fossil fuels rely on levelised costs, which ignore the costs that renewables impose on the system
as a whole. That's why such claims are at odds with the regression analysis you have performed.
Great work. People are already waking up to the fact that renewables aren't providing the cheap energy they were promised. It's nice to have a mathematical source which validates the concerns of renewable energy sceptics. It's also worth noting that the price of capital in terms of interest payments, recently became four times as expensive. This disadvantages any energy source with high upfront costs.
I would also add that Denmark has the geographical benefits of exceptional wind resources, a relatively small population, and direct electrical interconnections to Norwegian hydroelectric dams which can be used for electricity storage. Without those advantages, the cost of 100% wind/solar would be much higher.
Denmark is not unique in their stupidity as Ireland also has a ban on nuclear power and is all-in on wind power. Oh, and also has sky-high energy prices.
NZ also has a ban on nuclear. From AI: In NZ about 61% of electricity is from hydro, 18% from geothermal, 8% from wind, 1% from solar and 12% from fossil fuels.
From the graph in the post NZ electricity cost is a little higher than in USA. I expect because of higher transmission costs.
One of the key limitations in many recent analyses linking electricity prices with the share of renewables is the failure to account for country-specific conditions. For example, comparing Denmark with Qatar or New Zealand can be misleading. Qatar has near-free access to natural gas and a very small population, while New Zealand benefits from abundant hydropower, making it naturally inclined toward low-cost renewable generation. These factors create structural differences that significantly affect electricity pricing, independent of the share of solar and wind.
A more appropriate method would be to analyze how a given country’s electricity prices have changed over time as the share of renewables increased. For instance, if Denmark has significantly expanded wind capacity over the past 20 years, it’s more meaningful to examine whether electricity prices have risen in tandem, and to what extent that rise can be attributed specifically to wind integration, as opposed to other factors like fossil fuel prices, carbon taxes, or grid upgrade costs.
Similarly, if we want to evaluate the economic effect of reducing renewable penetration, we cannot simply assume that all generation would revert to a global average mix. The question should be: what would Denmark replace its wind energy with—gas, coal, nuclear? Each of those comes with distinct capital, operational, and fuel costs, which would influence the resulting electricity price. That’s why comparing a country’s current energy mix with its past performance—rather than cross-country comparisons—is often a more accurate way to isolate the economic impact of renewables.
A striking example is Portugal, which has one of the highest shares of renewables in Europe, yet its electricity prices have remained lower than countries like France, which rely heavily on nuclear. This illustrates how multiple structural and policy factors, beyond just the percentage of renewables, shape the final cost of electricity.
More broadly, it is reasonable to hypothesize that there exists an optimal penetration level of variable renewables in each country—where the total system cost of electricity, including generation, balancing, grid upgrades, and backup capacity, is minimized. This optimal level would likely vary based on local conditions such as resource availability, existing infrastructure, and demand patterns. In theory, a well-functioning liberalized electricity market, free from distortionary subsidies or mandates, should naturally converge toward this cost-effective equilibrium by signaling the true marginal costs and reliability constraints of each technology.
It doesn't change your main result that much, but cost of living indices, such as the relative price of groceries, explain the electricity price better than per capita GDP (I tried data from https://www.numbeo.com/cost-of-living/rankings_by_country.jsp). Of course, there is the question of how much does the price of electricity itself affect the cost of living, which I don't know. Still, I think it is probably a better metric when comparing prices than per capita GDP.
Parameter | Coefficient | SE | 95% CI | t(114) | p
Interesting. I need some time to look carefully at the text and graphs before I draw too many conclusions but the first (cost of electricity and amount of green energy) seems kind of clear. Green is not a panacea.
For God's sake don't rely on Bjorn. He's a longtime energy/climate nutter.
Invite David Fishman, @pretentiouswhat to contribute to this topic. David is a genuine expert with a deep, professional understanding of China's solar and wind power and costs.
The author did his own analysis to check to see if Bjorn was correct. Emil’s own analysis showed a clear correlation between wind/solar penetration and higher electrical prices even when controlled for wealth of the nation.
It seems like there is relatively little discussion of biomass(specificially within the context of burning wood to generate electricity).
In the US the states with over 50-60% of there electricity from wind still have some of the lowest electricity rates for both industrial and household use.
It is true that renewables need more batteries and transmission to even things out, but they also have less price variability than gas (2022 spike). New renewables have cheaper cost profiles than older version of the tech, to such a degree that there are solid papers arguing that solar may be the cheapest energy source in basically every country by 2030.
I wonder how this analysis would look looking at the US for wind penetration. Production is actually often a much smaller part of rates than transmission, meaning that the differences between natural gas and wind are less salient than the delivery and subsidy to biomass.
If wind were truly a more expensive technology than everything else why would countries pick it? Also this ignores taller turbines driving prices down a lot (more swept area of turbines and winds are more consistent as well as faster in taller spots)
https://en.wikipedia.org/wiki/Wind_power_in_Iowa#Wind_generation
https://www.eia.gov/state/?sid=IA#tabs-5 (electricity and prices tab)
One of the issues with fossil fuels is that the fuel isn't that effective, so one cannot so easily store a few years worth of it (buy when price is low, use when price is high). With nuclear energy, this problem is resolved too
But for nuclear, fuel costs only tiny fraction of expenses, so this comparison doesn't fly. You still need to pay salaries to personnel even if plants are operating at low capacity.
You are not seriously asking why countries would implement it if it were more expensive? In Europe at least this was driven by pure ideology.
Also, it is often not more expensive at a project level, but at a system level, because it does not in fact replace 1 for 1 the gas it is generally compared to (or nuclear or hydro).
Excellent points.
"You are not seriously asking why countries would implement it if it were more expensive? In Europe at least this was driven by pure ideology."
Yes, this happens when you leave important decisions to idiots.
Claims that renewables are becoming cost-competititve with fossil fuels rely on levelised costs, which ignore the costs that renewables impose on the system
as a whole. That's why such claims are at odds with the regression analysis you have performed.
Nuclear is clearly the way to go. There is no reason why modern nuclear plants can't be made so that they're extremely safe.
Great work. People are already waking up to the fact that renewables aren't providing the cheap energy they were promised. It's nice to have a mathematical source which validates the concerns of renewable energy sceptics. It's also worth noting that the price of capital in terms of interest payments, recently became four times as expensive. This disadvantages any energy source with high upfront costs.
Interesting analysis.
I would also add that Denmark has the geographical benefits of exceptional wind resources, a relatively small population, and direct electrical interconnections to Norwegian hydroelectric dams which can be used for electricity storage. Without those advantages, the cost of 100% wind/solar would be much higher.
Correction:
Denmark is not unique in their stupidity as Ireland also has a ban on nuclear power and is all-in on wind power. Oh, and also has sky-high energy prices.
NZ also has a ban on nuclear. From AI: In NZ about 61% of electricity is from hydro, 18% from geothermal, 8% from wind, 1% from solar and 12% from fossil fuels.
From the graph in the post NZ electricity cost is a little higher than in USA. I expect because of higher transmission costs.
Add Germany.
One of the key limitations in many recent analyses linking electricity prices with the share of renewables is the failure to account for country-specific conditions. For example, comparing Denmark with Qatar or New Zealand can be misleading. Qatar has near-free access to natural gas and a very small population, while New Zealand benefits from abundant hydropower, making it naturally inclined toward low-cost renewable generation. These factors create structural differences that significantly affect electricity pricing, independent of the share of solar and wind.
A more appropriate method would be to analyze how a given country’s electricity prices have changed over time as the share of renewables increased. For instance, if Denmark has significantly expanded wind capacity over the past 20 years, it’s more meaningful to examine whether electricity prices have risen in tandem, and to what extent that rise can be attributed specifically to wind integration, as opposed to other factors like fossil fuel prices, carbon taxes, or grid upgrade costs.
Similarly, if we want to evaluate the economic effect of reducing renewable penetration, we cannot simply assume that all generation would revert to a global average mix. The question should be: what would Denmark replace its wind energy with—gas, coal, nuclear? Each of those comes with distinct capital, operational, and fuel costs, which would influence the resulting electricity price. That’s why comparing a country’s current energy mix with its past performance—rather than cross-country comparisons—is often a more accurate way to isolate the economic impact of renewables.
A striking example is Portugal, which has one of the highest shares of renewables in Europe, yet its electricity prices have remained lower than countries like France, which rely heavily on nuclear. This illustrates how multiple structural and policy factors, beyond just the percentage of renewables, shape the final cost of electricity.
More broadly, it is reasonable to hypothesize that there exists an optimal penetration level of variable renewables in each country—where the total system cost of electricity, including generation, balancing, grid upgrades, and backup capacity, is minimized. This optimal level would likely vary based on local conditions such as resource availability, existing infrastructure, and demand patterns. In theory, a well-functioning liberalized electricity market, free from distortionary subsidies or mandates, should naturally converge toward this cost-effective equilibrium by signaling the true marginal costs and reliability constraints of each technology.
The article is predicated on the belief that AGW is real.
"Solar and wind are very expensive."
In so many ways. They are undependable, destructive to the ecosystem, expensive to maintain, fragile, and occupy valuable land, rendering it unusable.
It doesn't change your main result that much, but cost of living indices, such as the relative price of groceries, explain the electricity price better than per capita GDP (I tried data from https://www.numbeo.com/cost-of-living/rankings_by_country.jsp). Of course, there is the question of how much does the price of electricity itself affect the cost of living, which I don't know. Still, I think it is probably a better metric when comparing prices than per capita GDP.
Parameter | Coefficient | SE | 95% CI | t(114) | p
-------------------------------------------------------------------------
Intercept | -4.18e-17 | 0.06 | [-0.12, 0.12] | -6.77e-16 | > .999
Groceries Index | 0.41 | 0.06 | [ 0.28, 0.54] | 6.39 | < .001
SolarWind | 0.54 | 0.06 | [ 0.41, 0.66] | 8.39 | < .001
Interesting. I need some time to look carefully at the text and graphs before I draw too many conclusions but the first (cost of electricity and amount of green energy) seems kind of clear. Green is not a panacea.
In a scenario where western countries had an ideological commitment to nuclear and coal powered electricity generation costs would be seen to fall too
For God's sake don't rely on Bjorn. He's a longtime energy/climate nutter.
Invite David Fishman, @pretentiouswhat to contribute to this topic. David is a genuine expert with a deep, professional understanding of China's solar and wind power and costs.
I didn't rely on him. I thought his point was maybe wrong, so I checked, and he was mostly right.
Did you actually read the article?
The author did his own analysis to check to see if Bjorn was correct. Emil’s own analysis showed a clear correlation between wind/solar penetration and higher electrical prices even when controlled for wealth of the nation.
And Chinese electricity is dominated by coal.