Renewable energy is cheap due to fluctuations in fuels – Watt?

Roger Caiazza

When New York's Climate Leadership and Community Protection Act (Climate Act) was questioned, supporters claimed that renewable energy development could reduce costs. This article responds to their argument that reduced fuel price fluctuations will make cheaper renewable energy sources.

On December 18, 2024, the New York Energy Public Hearing Committee enabled lawmakers to question the progress of the New York State Energy Research and Development Bureau (NYSERDA) and the New York State Department of Public Services (DPS) staff regarding the climate bill. Jessica Waldorf, chief of staff and director of policy implementation, was asked what the impact of climate-based emission reductions, with New York less than the annual increase in global greenhouse gas emissions observed. There are other reasons why “building renewable energy in New York is not only about emissions,” Waldorf said. She gives two reasons: energy security and price fluctuations.

Another thing I want to say about energy security is price fluctuations. Customers are whimsical about the fossil fuel industry and the up and down markets we see from fossil fuels. Positioning our energy production and renewable energy can enable us to achieve price stability. This is definitely the benefit of building resources here.

The claim was also filed in New York State's energy program Planning Commission On March 3, 2025, the claim was mentioned in order to adopt the scope of the national energy program. Jeff Freedman's speech at the Center for Atmospheric Science Research, the University of Albany, New York includes the following slideshows that make people claim that renewable energy can reduce costs.

One feature of Nyserda documentation is the lack of detail, so it is no surprise that the reasons for the claim are not readily available. Table 6-1 Climate Impact Assessment in New York State Chapter 06: Energy. This chapter does not specifically address renewable energy costs. I searched for reference fees in this chapter and found a related reference on page 370:

Energy Cost: Fossil fuel prices are increasingly volatile, mainly because they are traded in global markets. In contrast, the power sector composed of large amounts of renewable resources without fuel costs can lead to less volatile energy costs due to the elimination of the drivers of energy cost variability. The existence of distributed resources expands this effect. Whether the cost of cleaning power sectors is lower, comparable or higher than the status quo, they will be more predictable and unlikely to create indirect costs incurred by unexpected price changes.

The presumption in this paper is that these claims are based on the fact that renewable energy will be cheaper and less volatile, and renewable energy will be less fuel-costed power systems that renewable energy will be less expensive, resulting in cheaper and safer energy. This, in turn, is based on two presumptions: fuel prices are volatile due to global markets, and renewable energy will eliminate this cost driver.

Fuel fluctuations

The U.S. Energy Information Administration (EIA) noted in June 2024 that fossil fuel price volatility has shown significant changes over time, with volatility particularly high in recent years: “In 2022, natural gas price volatility reached extreme levels, with historical volatility reaching the highest in 1994. Please note that the EIA only discusses natural gas volatility, which has become a larger source of power generation fuel in recent years. I think the increasing dependence on individual fuels may be the fundamental reason for the increased volatility observed.

In any case, the New York agency’s global market argument chose only one driver for fuel price fluctuations. EIA gave other reasons for natural gas variability in August 2022:

Increased uncertainty in market conditions that affect gas supply and demand can lead to high prices. Events leading to changing market conditions include:

• Production freeze
• storm
• Unplanned pipeline maintenance and downtime
• Deviate from normal weather
• Changes in inventory levels
• Availability of alternative fuels
• Changes in import and export
• Other sudden changes in demand

U.S. natural gas prices typically fluctuate in the first quarter of the year due to weather changes. Factors that led to increased volatility in the first three months of this year include:

Of the eight events that contribute to changing market conditions and fuel fluctuations, the only event related to global market conditions.

There is another aspect of volatility. In today's electricity system prices, when loads peak in the hottest and coldest annual events. When the grid relies on weather-dependent wind and sun resources, prices also soar when resources pause. This effect will intensify when the two overlap. I think this volatility will be more frequent, but shorter than any fuel price fluctuations caused by global events.

European experience

But if the fuel volatility claim is correct, proponents should be able to point to jurisdictions where wind, solar and energy storage make electricity cheaper. The best example is that renewable energy is cheaper because it reduces fuel fluctuations, which should be Germany. Oil, coal and gas prices soared after Russia's invasion of Ukraine and have been fluctuating since then. Germany's Energiewende is the country's plan to transition to a low-carbon, nuclear-free economy and often takes what New York should do as an example. “According to German federal network agencies, Germany's renewable energy capacity increased by nearly 20 gW (+12%) in 2024 to nearly 190 gw,” Enerdata reported. “If the advocates of supporters are correct, then prices should be lowered. However, since 2000, electricity prices in German households have increased by 116% to 30.43 cents per kilowatt-hour in 2019. As of April 1, 2024, households with basic supplier contracts pay approximately 46 cents per kilowatt-hour, which is “the most expensive option compared to other providers or special contracts.”

Another way to view this claim is to compare electricity prices within the EU. I strongly recommend that the Nemeth report covers European energy issues. The post-EU Affordable Energy Action Plan only includes such comparisons. It quoted Ursula von der Leyen, President of the European Commission, as saying: “We are pushing for lower energy prices and competitiveness. We have greatly reduced energy prices in Europe by doubling renewable energy.”

However, the data in the figure below does not support her claim.

The analysis points out:

Note that the average household price level shows a large difference between coal, nuclear and gas using and EU countries focusing on wind and solar energy. 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 The population is small, with a large number of windmills EUR/KWh and Denmark at 39.44 EUR/KWh!

Data sources and data years are important. Eurostat used the number of reordered some countries since the first quarter of 2024, but the overall argument is that “countries that double in renewable energy” and other improper options shut down other bad options for nuclear power plants and/or coal, but are still supported.

discuss

Roger Pielke Jr. recently published an article about the politicization of expertise related to it here. He believes that society needs to rely on the expertise of experts in many fields – “no one knows enough to manage the government”. As a result, society needs all of us. “We don't have to agree with everything, but we have to work together,” he explained. He then pointed out: “In recent years, voucher expertise (such as many things) has been pathologically politicized.”

This is what the politicization of the implementation of the Climate Act, led by Nyserda. The presenters at the meeting were carefully selected to further illustrate that the Climate Act was outstanding. For example, consider Jeff Freedman's speech to the Planning Commission. His main research focuses on the “renewable energy and atmospheric boundary layer (ABL) processes”, so he leans towards renewable energy virtues. His lack of experience in the energy sector has given him the right to claim that “renewable energy can reduce costs” because he insists on narrative, so he is a spokesperson.

New York institutions must consider shareholder comments about regulatory actions. Unfortunately, they only go through the action. Rather than using the process as an opportunity to improve the product, it is seen as an obligation. My problem is that if someone provides a specific comment or asks a specific question in their work, there is no document proof of the submitted question, and nothing can respond to the raised question. For example, in Freedman’s speech, there is no claim that renewable energy can reduce costs. I have no doubt that Nizelda will continue to serve as renewable energy that can reduce costs, and the cost of doing nothing is worse than the cost of taking action. They never respond to the relevant questions they asked, and as long as they can get out of the situation, they will continue to do so. I think this is another example of Nyerda's pathological politicization expertise because they are so arrogant that they don't think there is any response to stakeholder comments.

in conclusion

The biggest obstacle to any zero net transition from fossil fuels is the inevitable cost of implementation. In New York, the Hawkel administration has evaded the issue since the adoption of the Climate Act. They can only cover up the reality for so long. The question is whether issues related to zero-zero transition will be addressed until the New York economy is severely damaged.

Meanwhile, if you hear someone saying renewable energy can reduce costs, ask them why Germany’s electricity prices are so high, or cite any example of the jurisdictions that are transitioning to their electric systems that reduce taxpayer billing costs when using renewable strategies to rely on wind, solar and storage resources to power the grid.

Roger Caiazza blogs on New York’s energy and environmental issues of pragmatic environmentalists. He has been a practical meteorologist for nearly 50 years, is a certified consultant and holds a BS and MS degree. The opinions expressed in this article do not reflect the position of any of his previous employers or any other organization he has associated with.

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