The myth of renewables pushing up power prices

This briefing by Zero Carbon Analytics challenges the claim that renewable energy increases electricity prices, arguing that real-world data from the US, EU, Australia, and India often show a correlation between high renewable uptake and below-average power prices.

• Global data from the International Renewable Energy Agency (IRENA) indicates that in 2024, 90% of new grid-scale renewable projects were cheaper than the lowest-cost new fossil fuel alternatives. Onshore wind is the cheapest new electrical energy source globally with an average levelised cost of electricity (LCOE) of USD 0.034/kWh, followed by solar PV at USD 0.043/kWh and hydropower at USD 0.057/kWh.
• In the US, most states with above-average wind and solar shares have below-average household power prices. This includes Iowa, South Dakota, and New Mexico, where variable renewables exceeded 50% of the mix in the first nine months of 2025. Seven of the 10 states with the lowest residential tariffs have above-average integration rates, including Oklahoma.
• In the EU, countries with above-average wind and solar shares, such as Denmark, generally have below-average pre-tax household power prices. In Spain, wind and solar made up 44% of electricity generation in the first half of 2025, contributing to a wholesale electricity price 32% lower than the EU average and a pre-tax household price of EUR 0.18/kWh, which is 13.1% below the EU average.
• In India, while coal provided 73.6% of power output in 2024 and the overall relationship between renewables and prices is unclear, specific regions show benefits. In Rajasthan, the average price distribution utilities pay is below the national median, and a study suggests renewable integration in Madhya Pradesh could lower utility power purchase costs by up to 11%.
• In Australia, South Australia has high electricity prices due to an 'illiquid and highly concentrated market for on-demand electricity', a condition that predates its energy transition. However, daily data shows that when wind and solar shares rise, prices tend to decrease, sometimes dipping into negative territory when these sources exceed 85% of the mix.

APA

Hedley, N. (2025). The myth of renewables pushing up power prices. Zero Carbon Analytics. https://zerocarbon-analytics.org/energy/the-myth-of-renewables-pushing-up-power-prices/

Chicago

Hedley, Nick. The myth of renewables pushing up power prices. Zero Carbon Analytics, 2025. https://zerocarbon-analytics.org/energy/the-myth-of-renewables-pushing-up-power-prices/.

Wikipedia

{{cite report |last1=Hedley |first1=Nick |title=The myth of renewables pushing up power prices |publisher=Zero Carbon Analytics |date=17 December 2025 |url=https://zerocarbon-analytics.org/energy/the-myth-of-renewables-pushing-up-power-prices/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{hedley2025myth, author = {Hedley, Nick}, title = {{The myth of renewables pushing up power prices}}, institution = {Zero Carbon Analytics}, year = {2025}, month = dec, url = {https://zerocarbon-analytics.org/energy/the-myth-of-renewables-pushing-up-power-prices/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }