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Big beautiful mess will result in higher power prices and job losses

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By Charles Hinckley

· 5 min read


The Big Beautiful Bill that passed the House does a wonderfully effective job of gutting US renewable energy construction. Here’s the problem, renewable energy is by far the largest source of new power plant construction in the US and has been for some time. If we stop investing in power plants here in America, there is only one plausible outcome – not meeting the demand for electricity and higher electricity prices. This is the choice – build power plants or not build power plants, and not investing in power generation is a bad outcome for America.

In the past five years, the US has installed 178 MW of renewable generation, 13 GW of gas fired generation, and 3 MW of nuclear power.  

The market does not incentivize gas fired generation at scale. The lack of gas fired generation has little to do with energy policy or lack of ability to get permits, etc. The lack of gas fired generation construction is almost entirely due to market structures that don’t work. Over the past 20 years, a significant amount of our gas generation project has filed for bankruptcy, and that was when the gas fired projects cost were at or under $1,000/kW. Now the cost of a gas fired power plant is $2,400/kW. Gas power plants have gone bankrupt in most major markets: ERCOT in Texas, MISO and PJM in the Midwest and Eastern US, NYISO in New York, ISONY in New England, etc. Look at bankruptcy history as a measure of project viability: how many gas fired power plants went bankrupt in the past 20 years - most of them? Let’s recall between 1998 and 2005, over 200 GW of new capacity was added to the U.S. grid, overwhelmingly gas-fired CCGT, representing investment of approximately $250 billion. Between $150 - $200 Billion of that investment was “written off” by the original investors. Today, that same amount of generation would be nearly $500 billion investment. Given the historical bankruptcy experience in these market structures added to the dramatic increase in costs, one should not expect anywhere near the necessary amount of investment to meet demand at any price much less a reasonable price. 

In addition to market constraints, as if there need be any additional constraints, the supply chain does not exist to support gas powered plants at on the time scale and volume needed.  Deliveries for turbines have years of backlog, and we import most generators, steam turbines, boilers, etc.  Further, it takes years of development work to get a gas project ready to start construction, and that timeline is hard to compress – there are federal but also state and local permits, interconnection planning itself takes years, interconnection and gas pipeline improvements are generally needed, etc.  

The market DID support wind and solar at scale (that included the renewable tax credits). Renewables could be more easily absorbed into the grid as they are generally built in 100 MW – 200 MW project sizes, vs. 500 MW to 1,000 MW for gas fired generation. And renewables are cheap – by far the cheapest source of new power generation.

The renewable power market structure isn't perfect (it relies on tax credits), but it works.  One only needs to look at the results a boom of renewable generation. The bankruptcy experience of renewable power projects is nearly non-existent. 

If we break renewable market structure, then NO market structure works! Of course, in 2025 there is a significant amount of bilateral contracting outside of the overall market structure. But to be clear, when we break the renewable project market structure by getting rid of the renewable tax credits, we end up with less power plant construction with growing demand and therefore the obvious result - higher power prices and even physical shortages (less supply to meet growing demand and incremental producers have higher costs = high prices). 

Thought experiment: what if there was no PTC/ITC over the past five years? In 2025, renewable power is likely to provide 40% of all power consumed in Texas. What would the power prices be in Texas today? Would gas projects have filled the market need like the renewables did? No of course, not given the bankruptcy history of gas fired power plants and the increasing cost of gas plant CAPEX ($1,000 to $2,400). Absent the historical PTC/ITC credits that fueled wind and solar in Texas, there would be physical shortages and unimaginable power prices now here in 2025.

Now the fact is that at current renewable CAPEX (low), efficiency (high) and power prices (high and going higher) quality utility scale projects work without the tax credits, but projects with marginal solar and wind resources, residential, commercial, not so. 

If this renewable credit issue isn't "fixed", the clear and undeniable outcome will be less power plant investment, higher power prices, loss of American jobs in the renewable sector, and a less efficient American economy given the power shortage and impacts of higher prices. There are over 300,000 people employed due to wind and solar in the US in 2025.  

Let's Make American Great Again and make sure we keep adding investment into our power sector. The assumption that if we kill the renewable construction that new supply will be met with gas generation is a false assumption and not at all supported by history, or the physical constraints to build gas fired generation that are quite real. In the year 2000 in response to the California power crisis, I lead the development and construction of 5 gas fired peaking power plants all brought online in a period of 1-2 years. I speak from experience, we are 10 years away today from building gas projects at the scale needed, and the price point is all wrong – those $2,400/kW gas plants need more than $100/MWHR vs the solar/wind price of the low $40’s. $100 is more than $40.  The current market structure for renewables is far from perfect and clearly does not fit ideological political worldviews, but it works and a replacement market structure is many years away.

illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.

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About the author

Charles Hinckley is currently the Managing Partner at CC Hinckley Co. a firm he founded in 1998; most recently, he has been the interim COO of a utility-scale solar power development company, Co-Head of the New York office of investment bank Marathon Capital, the CEO of AWCC Capital, and the CEO of Noble Environmental Power.

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