The table above shows that natural gas plants have the lowest overall O&M costs. Solar plants come in a close second. The reason solar plants have marginally higher O&M costs is that solar has many hidden maintenance costs. For example, solar plants require approximately 20 gallons of water per megawatt hour to remove dirt and dust from the panels in addition to the cost of labor. Solar plants need to replace their inverters—devices that convert the direct current electricity produced by solar panels into the alternating current electricity used in homes and businesses. Solar inverters need replacement for a variety of reasons (electrical surges, extreme weather conditions, or improper installation or maintenance) at a cost that ranges from $50,000 to $250,000 per unit.

Large nuclear plants are the most expensive to operate, with offshore wind plants coming in a close second. Because wind turbines break down often, high maintenance costs make wind plants more expensive to maintain than small nuclear plants. In addition, equipment failures and declining performance often make the cost of operating older (16+ year old) wind turbines prohibitive. At 16 years of age, onshore turbines can lose 37% of their original output, and offshore turbines can lose 50%.

In terms of fuel costs, solar and wind don’t need fuel, so they have the lowest overall fuel costs. Second is large nuclear, followed by small nuclear and natural gas.

We’ve so far estimated the affordability of building, operating, and maintaining power plants. But there are many other costs we still need to consider.

Transmission costs

We have to consider the costs of transporting electricity from power plants to homes and businesses. The US has about 700,000 circuit miles of power lines that connect power plants to local electricity networks, plus another 5.5 million miles of local power lines that carry electricity to its final destinations. 

How much does it cost to build a power line? That depends on the kind of line it is. The high voltage lines that transport electricity over large distances are much more expensive to build than the lines that distribute power locally. Building high voltage lines costs between $1.17 million and $8.62 million per mile on average. But that’s just an average. Sometimes costs are higher. For example, the Tehachapi Renewable Transmission Project in California, which moves electricity from inland wind and solar plants to the coast, cost about $11 million per mile (about $2 billion for a project spanning 173 miles).

The exact cost of a power line depends both on the line’s voltage (for example 765 kV, 500 kV, or 345 kV) and on geographic, legal, and other factors. They include the costs of siting, permitting, and environmental compliance. Population density and right-of-way land value can affect the cost, as can the terrain and geophysical conditions that affect line design and construction.

Because power lines are expensive to build, the distance between power plants and the homes and businesses who use the power is an important consideration. Nuclear and natural gas can be built near urban centers where homes and businesses are located. By contrast, wind and solar plants are usually located far from homes and businesses. As a result, wind and solar require more power lines to move the electricity from where it’s produced to where it’s used. How much more? The U.S. Department of Energy Office of Electricity estimates that in order for the US to hit its renewable energy goals, the electric grid would need to expand 300%. In other words, the US would have to take its existing electrical grid and multiply it three times over to move electricity from wind and solar plants to people’s homes and businesses. That means triple the number of power lines you see out your living room window, or on your drive through the country, or on your hike through the woods. The practical obstacles to expanding the US electrical grid can seem insurmountable. Land-use conflicts and lengthy legal battles can make it extremely difficult to build even a single new transmission line, much less hundreds of thousands of miles of new lines. 

By contrast, nuclear power and natural gas do not require new power lines on this scale because existing power lines can be repurposed to accommodate them. Nearly 25% of US coal power plants are scheduled to retire by 2029. About 80% of these plants can be repurposed for small nuclear reactors. A US Department of Energy report found that “80% of retired and operating coal power plant sites that were evaluated have the basic characteristics needed to be considered amenable to host an advanced nuclear reactor.” Re-using the transmission lines, land, buildings, and equipment at coal sites can cut nuclear construction costs by 35%.

It’s true that existing power lines might need to be upgraded to handle electricity from new power plants. But that’s the case no matter what kind of power plants we build—whether wind and solar or nuclear and natural gas. The choice, then, isn’t between using existing lines or not—all new power plants are going to have to use existing lines. The choice is whether or not we need to build a host of entirely new lines. The distance between solar and wind plants, on the one hand, and urban areas, on the other, requires the construction of many new power lines. By contrast, the proximity of nuclear and natural gas plants to urban centers alleviates the need for building new power lines on a massive scale.

There is no feasible way that the US can triple the amount of high-voltage transmission capacity in the near future. The planning, permitting, and land acquisition process alone can take a decade and typically involves multiple stages, including environmental reviews, public hearings, and consultation with various stakeholders such as landowners, local communities, and environmental groups. The permitting process is overseen by federal, state, and local regulatory agencies, and lawsuits or appeals by stakeholders or environmental groups add additional time and complexity to the process.

Grid-balancing costs

Every second of every day, technicians work to maintain a delicate balance between electricity supply and electricity demand to ensure the world’s electricity grids remain stable and reliable. Electricity from power plants travels through wires at a specific rate determined by the frequency of the electrical current, and frequencies from different power sources need to be balanced across the entire electrical grid. Think of a symphony orchestra: if the timing of one instrument is off, the result is cacophony. Similarly, if the frequencies of power sources across the grid are off by as little as 1%, the result is blackout. 

Keeping the grid balanced is costly. To illustrate these costs, let’s imagine a regional electrical grid that supplies electricity to a small city. It has two solar power plants, two wind plants, a natural gas plant, and battery storage. Grid operators manage the flow of electricity to the city in something similar to the way air traffic controllers manage the movement of aircraft. They actively monitor electricity supply and demand and coordinate different energy sources to ensure the city’s homes and businesses have the reliable power they need.

If it’s sunny and the wind is blowing, then the solar and wind plants produce a steady supply of electricity. If clouds roll in or the wind slackens, the solar and wind plants will produce less electricity than usual. But the city’s demand for electricity doesn’t decline every time it’s cloudy or windless. To close the gap between electrical supply and electrical demand, the grid operators keep the local natural gas plant running on standby. When electrical supply from the wind or solar plants suddenly drops on account of the weather, they ramp up electricity production at the natural gas plant to ensure the city continues to get the power it needs. Otherwise, the sudden drop in electrical supply would leave the city’s homes and businesses in the dark.

Sometimes the grid operators have the opposite problem: too much electricity. When the sun is very bright or the wind is blowing hard, the solar and wind plants produce more electricity than the city needs. Some excess electricity can be stored in batteries for later use, but energy storage is expensive. So excess electricity has to be diverted somewhere, or the wind or solar plants have to be shut down. Otherwise, the grid’s balance could become unstable, electrical equipment could get damaged, and blackouts could result.

This example illustrates in a highly simplified way what’s involved in balancing an electrical grid. Every system and every step in the grid-balancing process has associated costs. They include:

1. Reserve capacity costs. The costs of maintaining reserve generating capacity; that is, the capacity to generate more electricity when electrical supply falls short of electrical demand. In the example above, reserve capacity costs would include  the cost of operating and maintaining the natural gas plant.

2. Curtailment costs. The costs of curtailing electrical supply when electrical supply exceeds electrical demand. In the example above, curtailment costs would include the cost of paying power plants to shut down, the cost of maintaining backup systems, and the cost of lost revenue from excess electricity that can’t be sold.

3. Load-following costs. The costs of actively monitoring, managing, and adjusting reserve capacity and curtailment in real time to quickly respond to changes in demand.

4. Energy storage costs. The cost of operating and maintaining energy storage technologies such as batteries.

5. Voltage control costs. The costs of ensuring that voltage stays within acceptable limits. Voltage is like the pressure that pushes water through a hose. If the voltage level on the grid falls outside of acceptable limits, it can damage electrical equipment, trigger power outages, or create safety hazards. 

Grid-balancing costs are inversely proportional to the reliability of a power source: the less reliable a power source, the higher the costs of balancing the grid. As a result, wind and solar have higher grid-balancing costs than natural gas and nuclear because they’re less reliable energy sources. 

If solar power production falls because clouds roll in, grid operators need to quickly ramp up another power source to pick up the slack. Conversely, when the clouds finally disperse, and solar power production suddenly increases, grid operators need to quickly ramp down other power sources. The complexity and inefficiency of ramping power production up and down to compensate for weather changes throughout the day make it expensive to balance a grid with numerous wind and solar plants. 

In order to compensate for the unreliability of wind and solar, other sources of power, such as natural gas plants, need to be kept in reserve. In general, every megawatt of solar and wind capacity needs to be matched by a megawatt of backup capacity from more reliable power sources like natural gas. These backup plants continue burning fuel to maintain their temperature even if they're not generating electricity. The lower the temperature of a plant, the more pollution it produces. So to keep pollution to a minimum, efficient natural gas plants can’t operate at less than 50% of their capacity factor; otherwise they’d exceed legal limits on emissions. 

The practical demands of maintaining a reliable electrical grid add significantly to the overall costs of wind and solar. A system made up of a handful of reliable power sources ends up having lower grid-balancing costs than a system made up of many distributed intermittent power sources. As a result, nuclear power and natural gas have lower grid-balancing costs than wind and solar. 

The cost of subsidies

All energy sources are subsidized by the federal government. Common subsidies come in the form of tax credits and tax deductions. Here are some examples.

• The investment tax credit allows individuals and businesses to deduct a portion of the cost of installing solar, wind, nuclear, or geothermal energy systems.

• The production tax credit provides a per-kilowatt-hour credit for electricity generated from energy sources such as wind, solar, geothermal, nuclear, or biomass.

• The exploration and production tax credit allows companies to deduct 15% of the cost of drilling new oil and gas wells in the United States.

How much does it cost to subsidize different energy sources? The following graph shows the amount of federal subsidies spent on different energy sources per unit of electricity they produce. Solar and wind get a disproportionate amount of subsidies for the value they provide. Since 2010, wind has received 17 times and solar 75 times more subsidies per unit of electricity produced than the average for oil, gas, coal, and nuclear.

Natural gas has the lowest subsidy cost. Nuclear is second, then wind. Solar comes in a distant fourth place. 

Replacement costs

When we consider the costs of different power plants, we have to consider the plant’s usable lifespan and reckon the costs of refurbishing or replacing it. A quality tool might cost more than a poorly made one, but it’s worth the extra cost if it lasts twice as long. A similar point applies when comparing power plants.

Wind plants, for instance, cost less to build up front than large nuclear plants, but they’re not as durable. Nuclear plants last up to 400% longer than wind plants. So wind projects will likely need to be built and thrown away three to four times during the lifespan of a single large nuclear plant. Likewise, natural gas plants last 175% longer than wind plants. So you could expect to build about two wind plants to match the lifespan of a single natural gas plant. 

The following table compares the average expected lifespans of various power plants (source data here).

When we compare the lifespans of different power plants, it’s clear that nuclear has the lowest replacement costs. Nuclear power plants have fewer moving parts than the runner-up: natural gas plants. Fewer moving parts means fewer components that wear out with use. As a result, nuclear plants have a much longer lifespan. They don’t need to be replaced for a long time and can be refurbished in bits and pieces over the course of their long lives. 

Natural gas plants come in second. They have more moving parts that can wear out than nuclear plants, but they’re generally more robust than wind and solar plants, and they’re also less exposed to the elements. The components of wind and solar plants wear out relatively quickly. Solar panels degrade in efficiency every year, and they can’t be refurbished or replaced only in part. When a panel degrades, it needs to be replaced by a whole new panel. Something analogous is true of wind turbines. Their components degrade even faster than solar panels because they have more moving parts. As a result, wind plants have the shortest lifespans of any power plants. That gives them the highest replacement costs.

Total costs

This chapter has examined a dizzying variety of costs associated with different energy sources. The following table summarizes the results of all the costs we’ve discussed and ranks the four energy sources in each of the affordability subcategories described here. The top-ranking energy source in a given category receives a score of 1, and the bottom-ranking energy source in that category receives a score of 6. As a result, the lowest total numbers reflect the most affordable energy sources for the US.

These results help explain a puzzling fact: households and businesses end up paying more for electricity where governments mandate wind and solar power. German households saw their energy bills double between 2010 and 2020. Californians pay up to 80% more for electricity compared to the average electricity price in the US, and Americans in 28 other states with solar and wind mandates pay 11% more. 

The reason people find it puzzling that wind and solar make electricity more expensive is that they’re looking simply at the capital costs of building power plants. But we’ve seen that there are more costs to using an energy source than that—many more. 

Once we tally all the costs of building, operating, and maintaining power plants, as well as the costs of transmitting the electricity, balancing the grid, paying subsidies, and replacing power plants at the end of their lifespans, it becomes clear why households end up paying more for electricity generated by wind and solar. Even though it’s relatively cheap to build a solar plant or an onshore wind farm, it costs more to subsidize those power sources, to integrate them with the grid, and to replace them at the end of their lifespans. As a result, the more wind and solar power an electrical grid has, the more costly the electricity it produces. The claim that wind and solar provide cheap electricity is simply false.

For the US, natural gas is the most affordable energy source. Not only are natural gas plants the least expensive to build, but their relatively small footprint enables them to be built near urban centers. Moreover, the reliable power they produce makes it inexpensive to integrate them with the grid, and they have relatively long lifespans, which lowers their replacement costs. It’s no wonder that from 2007 to 2019, increased extraction of natural gas led to a 45% decrease in the wholesale price of electricity—something that saved US consumers $203 billion annually, or $2,500 annually for a family of four.

Nuclear power is the second most affordable energy source for the US. Nuclear plants enjoy all the affordability advantages of natural gas plants except one: they have a high sticker price. Yet even with that higher initial price, the electricity they produce is still more affordable than the electricity produced by either wind or solar.