Wisconsin Power and Light dealt wind farm setback

U.S. Utility Spending Shift highlights rising transmission and distribution costs, grid modernization, and smart meters, while generation expenses decline amid fuel price volatility, capital and labor pressures, and renewable integration across the power sector.

Key Points

A decade-long trend where utilities spend more on delivery and grid upgrades, and less on electricity generation costs.

✅ Delivery O&M, wires, poles, and meters drive rising costs

✅ Generation spending declines amid fuel price changes and PPI

✅ Grid upgrades add reliability, resilience, and renewable integration

Over the past decade, major utilities in the United States have been spending more on delivering electricity to customers and less on producing that electricity, a shift occurring as electricity demand is flat across many regions.

After adjusting for inflation, major utilities spent 2.6 cents per kilowatthour (kWh) on electricity delivery in 2010, using 2020 dollars. In comparison, spending on delivery was 65% higher in 2020 at 4.3 cents/kWh, and residential bills rose in 2022 as inflation persisted. Conversely, utility spending on power production decreased from 6.8 cents/kWh in 2010 (using 2020 dollars) to 4.6 cents/kWh in 2020.

Utility spending on electricity delivery includes the money spent to build, operate, and maintain the electric wires, poles, towers, and meters that make up the transmission and distribution system. In real 2020 dollar terms, spending on electricity delivery increased every year from 1998 to 2020 as utilities worked to replace aging equipment, build transmission infrastructure to accommodate new wind and solar generation amid clean energy transition challenges that affect costs, and install new technologies such as smart meters to increase the efficiency, reliability, resilience, and security of the U.S. power grid.

Spending on power production includes the money spent to build, operate, fuel, and maintain power plants, as well as the cost to purchase power in cases where the utility either does not own generators or does not generate enough to fulfill customer demand. Spending on electricity production includes the cost of fuels including natural gas prices alongside capital, labor, and building materials, as well as the type of generators being built.

Other utility spending on electricity includes general and administrative expenses, general infrastructure such as office space, and spending on intangible goods such as licenses and franchise fees, even as electricity sales declined in recent years.

The retail price of electricity reflects the cost to produce and deliver power, the rate of return on investment that regulated utilities are allowed, and profits for unregulated power suppliers, and, as electricity prices at 41-year high have been reported, these components have drawn increased scrutiny.

In 2021, demand for consumer goods and the energy needed to produce them has been outpacing supply, though power demand sliding in 2023 with milder weather has also been noted. This difference has contributed to higher prices for fuels used by electric generators, especially natural gas. The increased cost for fuel, capital, labor, and building materials, as seen in the U.S. Bureau of Labor Statistics’ Producer Price Index, is increasing the cost of power production for 2021. U.S. average electricity prices have been higher every month of this year compared with 2020, according to our Monthly Electric Power Industry Report.

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Renewable Energy Security strengthens affordability and grid reliability through electrification, wind, and solar, reducing fossil fuel volatility exposed by the Ukraine crisis, aligning with IEA guidance and the Paris Agreement to deliver resilient, low-cost power.

Key Points

Renewable energy security is reliable, affordable power from electrification, wind and solar, cutting fossil fuel risk.

✅ Wind and solar now outcompete gas for new power capacity.

✅ Diversifies supply and reduces fossil price volatility.

✅ Requires grid flexibility, storage, and demand response.

Oil, gas, and coal have been the central pillar of the global energy system throughout the 20th century. And for decades, these fossil fuels have been closely associated with energy security.  

The perception of energy security, however, is rapidly changing. Renewables form an increasing share of energy sectors worldwide as countries look to deliver on the Paris Agreement and mitigate the effects of climate change, with IEA clean energy investment now significantly outpacing fossil fuels. Moreover, Russia’s invasion of Ukraine has demonstrated how relying on fossil fuels for power, heating, and transport has left many countries vulnerable or energy insecure.  

The International Energy Agency (IEA) defines energy security as “the uninterrupted availability of energy sources at an affordable price” (IEA, 2019a). This definition hardly describes today’s global energy situation, with the cancellation of natural gas deliveries and skyrocketing prices for oil and gas products, and with supply chain challenges in clean energy that also require attention. These circumstances have cascading effects on electricity prices in countries like the United Kingdom that rely heavily on natural gas to produce electricity. In Europe, energy insecurity has been even further amplified since the Russian corporation Gazprom recently cut off gas supplies to several countries.  

As a result, energy security has gained new urgency in Canada and worldwide, creating opportunities in the global electricity market for Canada. Recent events provide a stark reminder of the volatility and potential vulnerability of global fossil fuel markets and supply chains. Even in Canada, as one of the largest producers of oil and gas in the world, the price of fuels depends on global and regional market forces rather than government policy or market design. Thus, the average monthly price for gasoline in Canada hit a record high of CAD 2.07 per litre in May 2022 (Figure 1), and natural gas prices surged to a record CAD 7.54 per MMBtu in May 2022 (Figure 2).  

Energy price increases of this magnitude are more than enough to strain Canadian household budgets. But on top of that, oil and gas prices have accelerated inflation more broadly as it has become more expensive to produce, transport, and store goods, including food and other basic commodities (Global News, 2022).  

Renewable Energy Is More Affordable 

In contrast to oil and gas, renewable energy can reliably deliver affordable energy, as shown by falling wholesale electricity prices in markets with growing clean power. This is a unique and positive aspect of today’s energy crisis compared to historical crises: options for electrification and renewable-based electricity systems are both available and cost-effective.  

For new power capacity, wind and solar are now cheaper than any other source, and wind power is making gains as a competitive source in Canada. According to Equinor (2022), wind and solar were already cheaper than gas-based power in 2020. This means that renewable energy was already the cheaper option for new power before the recent natural gas price spikes. As illustrated in Figure 3, the cost of new renewable energy has dropped so dramatically that, for many countries, it is cheaper to install new solar or wind infrastructure than to keep operating existing fossil fuel-based power plants (International Renewable Energy Agency, 2021). This means that replacing fossil-based electricity generation with renewables would save money and reduce emissions. Wind and solar prices are expected to continue their downward trends as more countries increase deployment and learn how to best integrate these sources into the grid. 

Renewable Energy Is Reliable 

To deliver on the uninterrupted availability side of the energy security equation, renewable power must remain reliable even as more variable energy sources, like wind and solar, are added to the system, and regional leaders such as the Prairie provinces will help anchor this transition. For Canada and other countries to achieve high energy security through electrification, grid system operations must be able to support this, and pathways to zero-emissions electricity by 2035 are feasible.  

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Germany Industrial Electricity Price Subsidy weighs subsidies for energy-intensive industries to bolster competitiveness as Germany shifts to renewables, expands grid capacity, and debates free-market tax cuts versus targeted relief and long-term policies.

Key Points

Policy to subsidize power for energy-intensive industry, preserving competitiveness during the energy transition.

✅ SPD backs 5-7 cents per kWh for 10-15 years

✅ FDP prefers tax cuts and free-market pricing

✅ Scholz urges cheap renewables and grid expansion first

Germany’s three-party coalition is debating whether electricity prices for energy-intensive industries should be subsidised in a market where rolling back European electricity prices can be tougher than it appears, to prevent companies from moving production abroad.

Calls to reduce the electricity bill for big industrial producers are being made by leading politicians, who, like others in Germany, fear the country could lose its position as an industrial powerhouse as it gradually shifts away from fossil fuel-based production, amid historic low energy demand and economic stagnation concerns.

“It is in the interest of all of us that this strong industry, which we undoubtedly have in Germany, is preserved,” Lars Klingbeil, head of Germany’s leading government party SPD (S&D), told Bayrischer Rundfunk on Wednesday.

To achieve this, Klingbeil is advocating a reduced electricity price for the industry of about 5 to 7 cents per Kilowatt hour, which the federal government would subsidise. This should be introduced within the next year and last for about 10 to 15 years, he said.

Under the current support scheme, which was financed as part of the €200 billion “rescue shield” against the energy crisis, energy-intensive industries already pay 13 cents per Kilowatt hour (KWh) for 70% of their previous electricity needs, which is substantially lower than the 30 to 40 cents per KWh that private consumers pay.

“We see that the Americans, for example, are spending $450 billion on the Inflation Reduction Act, and we see what China is doing in terms of economic policy,” Klingbeil said.

“If we find out in 10 years that we have let all the large industrial companies slip away because the investments are not being made here in Germany or Europe, and jobs and prosperity and growth are being lost here, then we will lose as a country,” he added.

However, not everyone in the German coalition favours subsidising electricity prices.

Finance Minister Christian Lindner of the liberal FDP (Renew), for example, has argued against such a step, instead promoting free-market principles and, amid rising household energy costs, reducing taxes on electricity for all.

“Privileging industrial companies would only be feasible at the expense of other electricity consumers and taxpayers, for example, private households or the small trade sector,” Lindner wrote in an op-ed for Handelsblatt on Tuesday.

“Increasing competitiveness for some would mean a loss of competitiveness for others,” he added.

Chancellor Olaf Scholz, himself a member of SPD, was more careful with his words, amid ongoing EU electricity reform debates in Brussels.

Asked about a subsidised electricity price for the industry at a town hall event on Monday, Scholz said he does not “want to make any promises now”.

“First of all, we have to make sure that we have cheap electricity in Germany in the first place,” Scholz said, promoting the expansion of renewable energy such as wind and solar, as local utilities cry for help, as well as more electricity grid infrastructure.

“What we will not be able to do as an economy, even as France’s new electricity pricing scheme advances, is to subsidise everything that takes place in normal economic activity,” Scholz said. “We should not get into the habit of doing that,” he added.

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California Heat Wave Grid Emergency sees CAISO issue Stage 3 alerts as record demand, extreme heat, and climate change strain renewable energy; conservation efforts avert rolling blackouts and protect grid reliability statewide.

Key Points

A grid emergency in California's heat wave, with CAISO Stage 3 alerts amid record demand and risk of rolling blackouts.

✅ CAISO triggered Stage 3 alerts, then downgraded by 8 pm PT

✅ Record 52,061 MW demand; conservation reduced grid stress

✅ Extreme heat and climate change heightened outage risks

California has avoided ordering rolling blackouts after electricity demand reached a record-high Tuesday night from excessive heat across the state, even as energy experts warn the U.S. grid faces mounting climate stresses. 

The California Independent System Operator, which oversees the state’s electrical grid, imposed its highest level energy emergency on Tuesday, a step that comes before ordering rolling blackouts and allows the state to access emergency power sources.

The Office of Emergency Services also sent a text alert to residents requesting them to conserve power. The operator downgraded the Stage 3 alert around 8:00 p.m. PT on Tuesday and said that “consumer conservation played a big part in protecting electric grid reliability,” and in bolstering grid resilience overall.

The state capital of Sacramento reached 116 degrees Fahrenheit on Tuesday, according to the National Weather Service, surpassing a record that was set almost 100 years ago. And nearly a half-dozen cities in the San Francisco Bay Area tied or set all-time highs, the agency said.

CAISO said peak power demand on Tuesday reached 52,061 megawatts, surpassing a previous high of 50,270 megawatts on July 24, 2006, while nearby B.C. electricity demand has also hit records during extreme weather.

While the operator did not order rolling blackouts, three Northern California cities saw brief power outages, and severe storms have caused similar disruptions statewide in recent months. As of 7:00 am PT on Wednesday, nearly 8,000 customers in California were without power, according to PowerOutage.us. 

Gov. Gavin Newsom, in a Twitter video on Tuesday, warned the temperatures across California were unprecedented and the state is headed into the worst part of the heat wave, which is on track to be the hottest and longest on record for September.

“The risk for outages is real and it’s immediate,” Newsom said. “These triple-digit temperatures throughout much of the state are leading, not surprisingly, to record demand on the energy grid.”

The governor urged residents to pre-cool their homes earlier in the day when more power is available and turn thermostats to 78 degrees or higher after 4:00 pm PT. “Everyone has to do their part to help step up for just a few more days,” Newsom said.

The possibility for widespread outages reflects how power grids in California and other states are becoming more vulnerable to climate-related disasters such as heat waves, storms and wildfires across California.

California, which has set a goal to transition to 100% carbon-free electricity by 2045, has shuttered a slew of gas power plants in the past few years, leaving the state increasingly dependent on solar energy.

At times, the state has produced a clean energy surplus during peak solar generation, underscoring the challenges of balancing supply and demand.

The megadrought in the American West has generated the driest two decades in the region in at least 1,200 years, and human-caused climate change has fueled the problem, scientists said earlier this year. Conditions will likely continue through 2022 and persist for years.

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US Utilities Shift From Coal as natural gas stays cheap, renewables like wind and solar scale, Clean Power Plan uncertainty lingers, and investors, state policies, and emissions targets drive generation choices and accelerate retirements.

Key Points

A long-term shift by utilities from coal to cheap natural gas, expanding renewables, and lower-emission generation.

✅ Cheap natural gas undercuts coal on price and flexibility.

✅ Renewables costs falling; wind and solar add competitive capacity.

✅ State policies and investors sustain emissions reductions.

When President Donald Trump signed an executive order last week to sweep away Obama-era climate change regulations, he said it would end America's "war on coal", usher in a new era of energy production and put miners back to work.

But the biggest consumers of U.S. coal - power generating companies - remain unconvinced about efforts to replace Obama's power plant overhaul with a lighter-touch approach.

Reuters surveyed 32 utilities with operations in the 26 states that sued former President Barack Obama's administration to block its Clean Power Plan, the main target of Trump's executive order. The bulk of them have no plans to alter their multi-billion dollar, years-long shift away from coal, suggesting demand for the fuel will keep falling despite Trump's efforts.

The utilities gave many reasons, mainly economic: Natural gas - coal’s top competitor - is cheap and abundant; solar and wind power costs are falling; state environmental laws remain in place; and Trump's regulatory rollback may not survive legal challenges, as rushed pricing changes draw warnings from energy groups.

Meanwhile, big investors aligned with the global push to fight climate change – such as the Norwegian Sovereign Wealth Fund – have been pressuring U.S. utilities in which they own stakes to cut coal use.

"I’m not going to build new coal plants in today’s environment," said Ben Fowke, CEO of Xcel Energy, which operates in eight states and uses coal for about 36 percent of its electricity production. "And if I’m not going to build new ones, eventually there won’t be any."

Of the 32 utilities contacted by Reuters, 20 said Trump's order would have no impact on their investment plans; five said they were reviewing the implications of the order; six gave no response. Just one said it would prolong the life of some of its older coal-fired power units.

North Dakota's Basin Electric Power Cooperative was the sole utility to identify an immediate positive impact of Trump's order on the outlook for coal.

"We're in the situation where the executive order takes a lot of pressure off the decisions we had to make in the near term, such as whether to retrofit and retire older coal plants," said Dale Niezwaag, a spokesman for Basin Electric. "But Trump can be a one-termer, so the reprieve out there is short."

Trump's executive order triggered a review aimed at killing the Clean Power Plan and paving the way for the EPA's Affordable Clean Energy rule to replace it, though litigation is ongoing. The Obama-era law would have required states, by 2030, to collectively cut carbon emissions from existing power plants by 30 percent from 2005 levels. It was designed as a primary strategy in U.S. efforts to fight global climate change.

The U.S. coal industry, without increases in domestic demand, would need to rely on export markets for growth. Shipments of U.S. metallurgical coal, used in the production of steel, have recently shown up in China following a two-year hiatus - in part to offset banned shipments from North Korea and temporary delays from cyclone-hit Australian producers.

RETIRING AND RETROFITTING

Coal had been the primary fuel source for U.S. power plants for the last century, but its use has fallen more than a third since 2008 after advancements in drilling technology unlocked new reserves of natural gas.

Hundreds of aging coal-fired power plants have been retired or retrofitted. Huge coal mining companies like Peabody Energy Corp and Arch Coal fell into bankruptcy, and production last year hit its lowest point since 1978.

The slide appears likely to continue: U.S. power companies now expect to retire or convert more than 8,000 megawatts of coal-fired plants in 2017 after shutting almost 13,000 MW last year, according to U.S. Energy Information Administration and Thomson Reuters data.

Luke Popovich, a spokesman for the National Mining Association, acknowledged Trump's efforts would not return the coal industry to its "glory days," but offered some hope.

"There may not be immediate plans for utilities to bring on more coal, but the future is always uncertain in this market," he said.

Many of the companies in the Reuters survey said they had been focused on reducing carbon emissions for a decade or more while tracking 2017 utility trends that reinforce long-term planning, and were hesitant to change direction based on shifting political winds in Washington D.C.

"Utility planning typically takes place over much longer periods than presidential terms of office," Berkshire Hathaway Inc-owned Pacificorp spokesman Tom Gauntt said.

Several utilities also cited falling costs for wind and solar power, which are now often as cheap as coal or natural gas, thanks in part to government subsidies for renewable energy and recent FERC decisions affecting the grid.

In the meantime, activist investors have increased pressure on U.S. utilities to shun coal.

In the last year, Norway's sovereign wealth fund, the world's largest, has excluded more than a dozen U.S. power companies - including Xcel, American Electric Power Co Inc and NRG Energy Inc - from its investments because of their reliance on coal-fired power.

Another eight companies, including Southern Co and NorthWestern Corp, are "under observation" by the fund.

Wyoming-based coal miner Cloud Peak Energy said it doesn't blame utilities for being lukewarm to Trump's order.

"For eight years, if you were a utility running coal, you got the hell kicked out of you," said Richard Reavey, a spokesman for the company. "Are you going to turn around tomorrow and say, 'Let's buy lots of coal plants'? Pretty unlikely."

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Wind and Solar Surpass Coal in U.S. power generation, as EIA data cites falling LCOE, clean energy incentives, grid upgrades, and battery storage driving renewables growth, lower emissions, jobs, and less fossil fuel reliance.

Key Points

An EIA-noted milestone where U.S. renewables outproduce coal, driven by lower LCOE, policy credits, and grid upgrades.

✅ EIA data shows wind and solar exceed coal generation

✅ Falling LCOE boosts project viability across the grid

✅ Policies and storage advances strengthen reliability

In a landmark shift for the energy sector, wind and solar power have recently surpassed coal in electricity generation in the United States. This milestone, reported by Warp News, marks a significant turning point in the country’s energy landscape and underscores the growing dominance of renewable energy sources.

A Landmark Achievement

The achievement of wind and solar energy generating more electricity than coal is a landmark moment in the U.S. energy sector. Historically, coal has been a cornerstone of electricity production, providing a substantial portion of the nation's power needs. However, recent data reveals a transformative shift, with renewables surpassing coal for the first time in 130 years, as renewable energy sources, particularly wind and solar, have begun to outpace coal in terms of electricity generation.

The U.S. Energy Information Administration (EIA) reported that in recent months, wind and solar combined produced more electricity than coal, including a record 28% share in April, reflecting a broader trend towards cleaner energy sources. This development is driven by several factors, including advancements in renewable technology, decreasing costs, and a growing commitment to reducing greenhouse gas emissions.

Technological Advancements and Cost Reductions

One of the key drivers behind this shift is the rapid advancement in wind and solar technologies, as wind power surges in the U.S. electricity mix across regions. Improvements in turbine and panel efficiency have significantly increased the amount of electricity that can be generated from these sources. Additionally, technological innovations have led to lower production costs, making wind and solar energy more competitive with traditional fossil fuels.

The cost of solar panels and wind turbines has decreased dramatically over the past decade, making renewable energy projects more economically viable. According to Warp News, the levelized cost of electricity (LCOE) from solar and wind has fallen to levels that are now comparable to or lower than coal-fired power. This trend has been pivotal in accelerating the transition to renewable energy sources.

Policy Support and Investment

Government policies and incentives have also played a crucial role in supporting the growth of wind and solar energy, with wind now the most-used renewable electricity source in the U.S. helping drive deployment. Federal and state-level initiatives, such as tax credits, subsidies, and renewable energy mandates, have encouraged investment in clean energy technologies. These policies have provided the financial and regulatory support necessary for the expansion of renewable energy infrastructure.

The Biden administration’s focus on addressing climate change and promoting clean energy has further bolstered the transition. The Infrastructure Investment and Jobs Act and the Inflation Reduction Act, among other legislative efforts, have allocated significant funding for renewable energy projects, grid modernization, and research into advanced technologies.

Environmental and Economic Implications

The surpassing of coal by wind and solar energy has significant environmental and economic implications, building on the milestone when renewables became the second-most prevalent U.S. electricity source in 2020 and set the stage for further gains. Environmentally, it represents a major step forward in reducing carbon emissions and mitigating climate change. Coal-fired power plants are among the largest sources of greenhouse gases, and transitioning to cleaner energy sources is essential for meeting climate targets and improving air quality.

Economically, the shift towards wind and solar energy is creating new opportunities and industries. The growth of the renewable energy sector is generating jobs in manufacturing, installation, and maintenance. Additionally, the decreased reliance on imported fossil fuels enhances energy security and stabilizes energy prices.

Challenges and Future Outlook

Despite the progress, there are still challenges to address. The intermittency of wind and solar power requires advancements in energy storage and grid management to ensure a reliable electricity supply. Investments in battery storage technologies and smart grid infrastructure are crucial for overcoming these challenges and integrating higher shares of renewable energy into the grid.

Looking ahead, the trend towards renewable energy is expected to continue, with renewables projected to soon provide about one-fourth of U.S. electricity as deployment accelerates, driven by ongoing technological advancements, supportive policies, and a growing commitment to sustainability. As wind and solar power become increasingly cost-competitive and efficient, their role in the U.S. energy mix will likely expand, further displacing coal and other fossil fuels.

Conclusion

The surpassing of coal by wind and solar energy in U.S. electricity generation is a significant milestone in the transition to a cleaner, more sustainable energy future. This achievement highlights the growing importance of renewable energy sources and the success of technological advancements and supportive policies in driving this transition. As the U.S. continues to invest in and develop renewable energy infrastructure, the move away from coal represents a crucial step towards achieving environmental goals and fostering economic growth in the clean energy sector.

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