Staff Reports
A new push by energy analysts has blown a hole in the sugar‑coated sales pitch politicians used to sell “100 percent clean” power laws. The Always‑On Levelized Cost of Energy, or AO‑LCOE, is a modeling effort that adds the missing bills — backup power, extra transmission, overbuilding and wasted output — to the tidy price tags wind and solar like to parade around. The result is stark: once you count the full system costs, wind and solar stop looking like freebies and start looking a lot more expensive, and consumers in several states are already paying the tab.
AO‑LCOE: the full cost they didn’t want you to see
The AO‑LCOE model by Isaac Orr and Mitch Rolling takes the common LCOE number and asks a simple question: what does it cost to actually serve customers, not just build a generator? Add a fleet of backup plants, miles of new transmission, the extra solar and wind you must overbuild, and the electricity you curtail when supply overshoots demand — and the per‑megawatt‑hour numbers rise fast. In the Minnesota case the model shows wind closer to $272 per MWh and solar near $472 per MWh once everything is included — not the bargain politicians promised. That’s a blunt reminder that LCOE alone ignores when the sun sets and the wind dies down.
Mandates and sky‑high bills
AO‑LCOE is more than a math trick. The analysts also looked at states with 100 percent clean or carbon‑free electricity laws and found those states pressed utilities for bigger rate increases and saw faster retail price growth. Their review shows mandate states requested roughly one‑third more in rate hikes and saw retail prices climb nearly twice as fast in the period studied. Minnesota offers the clearest invoice: a major utility asked regulators for nearly half a billion dollars more, saying cleaner generation was part of the reason. Regulators trimmed the ask — but they did not reverse the trend.
Models, caveats, and the missing backup
Yes, models vary — but the policy lesson holds
Let’s be fair: AO‑LCOE is a model and its numbers depend on assumptions about the kind of backup you build, how much transmission you need, and how much output you waste. Other studies can show lower or higher “full‑system” costs depending on the inputs. Still, the U.S. Energy Information Administration itself warns LCOE is a generator‑only metric that leaves out system costs. Policymakers who pushed mandates while ignoring backup power and reliability weren’t being cautious — they were being political. And when a promise of “cheaper power” turns into real rate cases and higher electricity bills, the public notice finally rings.
Fix it before voters pay the tab
Lawmakers have two choices: admit the accounting mistake and rewrite mandates so regulators must count full‑system costs, or keep promising free sunshine and expect voters to keep footing surprise bills. Practical steps are obvious — require full‑system cost accounting in utility planning, allow markets to value firm, dispatchable generation, and keep a role for affordable gas, nuclear and storage until reliable, low‑cost alternatives exist. Voters deserve honest math, not marketing. If politicians want to sell clean power, fine — but include the backup on the price tag. Otherwise, the only thing that will be “free” is the politicians’ promises; the electricity bills will arrive on time.
