Venture Capitalist Chamath Palihapitiya above, appearing on the All In podcast, on why solar beats gas and nuclear right now. Same argument applies to wind.
Chamath Palihapitiya is a Sri Lankan-born Canadian-American venture capitalist, engineer, and politician. He’s the founder and CEO of Social Capital, a fund he established in 2011 to invest in overlooked sectors like education, health, and financial services. Palihapitiya was previously an early Facebook executive, serving as VP of Growth and helping the platform reach one billion users.
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I’ve spoken to a number of clean energy developers who tell me that for a number of reasons, they are not wavering from their course any time soon.
Utilities, for instance, plan on long time scales, much longer than the 2 and 4 year election cycles.
Production tax credits and Investment tax credits for wind and solar respectively have bounced up and down in response to political winds over the last 20 years. We are at the point now where these technologies are so much cheaper than the alternatives that they make sense with or without the tax credits, particularly in light of the increased cost and decreased availability of gas turbines, and long lead times for nuclear.
My biggest fear for the damage that the No Good, Horrible, Very Bad Bill will do is damage to the US Auto Industry, which would be in grave danger even in the best of all possible worlds. More on that another day.
The Senate version of Donald Trump’s One Big Beautiful Bill repeals the clean-energy tax credits in the IRA for all wind and solar projects that don’t begin construction within a year of the bill’s passage or become fully operational by 2028. (And even if a project begins construction in the first half of 2026, it will need to meet extremely onerous domestic-sourcing requirements that many experts believe will be nearly impossible to satisfy.) As a result, future clean-energy projects, including many that have been announced but not yet built, will cost about 50 percent more than those that received the credits, according to an analysis by Jesse Jenkins, who leads the Princeton ZERO Lab. The inevitable result is that far fewer will come into existence. “It’s hard to think of a bigger self-own,” Jenkins told me. “We’re effectively raising taxes on the country’s main sources of new power at a time when electricity prices are already rising.”
The purported justification for these cuts is that renewables are unreliable energy sources pushed by woke environmentalists, and the country would be better served by doubling down on coal and natural gas. “More wind and solar brings us the worst of two worlds: less reliable energy delivery and higher electric bills,” wrote Energy Secretary Chris Wright in an op-ed last week. In fact, renewable energy is cheap and getting cheaper. Even without the tax credits, the price of onshore wind has fallen by 70 percent, solar energy by 90 percent, and batteries by more than 90 percent over the past decade. The IRA, by making these sources even more affordable, was projected to save American consumers an average of $220 a year in the decade after its passage.
The cost savings from renewables are so great that in Texas—Texas, mind you—all of the electricity growthover the past decade has come from wind and solar alone. This has made energy grids more reliable, not less. During the summer of 2023, the state faced several near failures of its electricity grid; officials had to call on residents to conserve energy. The state responded by building out new renewable-energy sources to stabilize the grid. It worked. “The electrical grid in Texas has breezed through a summer in which, despite milder temperatures, the state again reached record levels of energy demand,” The New York Times reported last September. “It did so largely thanks to the substantial expansion of new solar farms.”
In fact, the energy secretary’s description of wind and solar—as unreliable and expensive—is more aptly applied to fossil fuels. Coal is so costly relative to other energy sources that investment in building new plants has dried up. The natural-gas industry is facing such a crippling supply-chain crisis that the wait time for a new gas turbine—the combustion engine that converts natural gas into usable energy—can be as long as seven years. “What we’ve consistently heard from the industry is that, right now, there is just no way to get a new natural-gas plant running before 2030, and quite possibly even later,” Robbie Orvis, the senior director for modeling and analysis at the think tank Energy Innovation, told me. The cost of actually building one of those plants, meanwhile, has more than doubled in the past few years, pushing utilities to invest heavily in renewable sources, which can be built much faster and often at a lower cost.
Remember the era of cheap natural gas? Yea, that world is gone.
Utilities and tech companies may be clamoring to build new gas-fired power plants to meet rising energy demand, but no matter how much they envision gas as a solution, there’s no escaping gas’s expensive, bad-for-the-climate reality. Anyone harboring the illusion of low-cost gas is operating as if it’s still 2015.
“I think people have in their minds that gas is a cheap way to generate power”, said Rich Powell, CEO of trade group the Clean Energy Buyers Association. “New build natural gas is not a cheap way to generate electricity.”
Today, gas’s economics are facing pressure on two fronts: Supply chain bottlenecks and workforce shortages have made it nearly impossible to source equipment for new gas-fired power plants in the near to medium term while also raising the costs of those plants. And gas as a fuel is becoming more expensiveas global demand for liquified natural gas intensifies and the United States exports more of the fossil fuel instead of keeping it within our borders to meet American demand.
The shale revolution did usher in an era of cheap gas that reshaped the U.S. energy landscape, with gas overtaking coal in electricity generation around 2016. However, in recent years, new natural gas plants have constituted a small share of new capacity additions to the overall U.S. electricity mix.
In fact, since the 2018 surge, nearly every megawatt of new generation added to the grid has been clean energy—96% of new power in 2024 and 85% in 2023. That’s largely because for more than half a decade, renewables have been the cheapest sources of new electricity.
It turns out building gas plants is a use-it-or-lose-it skill.
Gas turbine manufacturers such as GE Vernova and Siemens Energy scaled back their production capabilities to meet lower demand, and output can’t be increased overnight. As a result, new gas turbine orders face a wait time of five to seven years before they can be delivered to utilities.
“Gas turbines were dead in 2022,” Siemens Energy North America President Rich Voorberg said at a recent conference, noting the company had been down to one customer.
Additionally, the slowdown in gas plant construction led to a brain drain, with NextEra CEO John Ketchum explaining much of the workforce that built the early 2000s boom has retired or moved to other fields, leaving behind a serious labor shortage.
Because of these factors, not only will it take years to build more natural gas-fired power plants, they’ll also be more expensive this time around. NextEra’s Ketchum estimates building a new plant today would cost three times as much as the last facility the utility built, back in 2022.
Others agree. “We did a quote and to do the same kind of unit that had been built a few years back it would be two and a half times more today,” Paul Sotkiewicz, president and founder of consultant E-Cubed Policy Associates.
Wind and solar might be the cheapest power sources for developers to build, watt for watt, but that doesn’t mean they produce the cheapest power to consumers – even if the wholesale price they trade for on electricity markets is the lowest. In fact, in many cases solar in particular has been able to bid negative prices, since the owners have no fuel costs, and low running costs, while they could rely on trading renewables certificates for income. This had the effect in the US of helping drive several nuclear reactors out of business. Gas turbines were getting capacity credits to stay online, and could turn off at midday, relying on the surge in demand, and prices, at sundown, for healthy profits. The reactors got no renewables certificates, despite lower lifetime emissions than solar, and no capacity credits, despite their capacity value being better than gas even with a week or so of oil stored on site for emergencies. In any case, grids using 15 minute ‘auctions’ pay the same price to all generators needed to cover demand, whether they bid negative (solar) or high (usually gas), so there are extremely strong incentives to restrict cheap sources to a bit below demand, and all make a killing together.
European wholesale prices, having gone through massive spikes in 2022, as the Ukraine war hit gas supply, have settled back some, but are still roughly twice what they were pre-war, and with more volatility. The countries with the highest domestic power prices are Denmark, Germany, and Ireland, all three notable for exceptionally high shares of wind power, and for legislative bans on construction of nuclear.
IOW, wind and solar are the cheapest energy sources of all…besides efficiency and wiser lives.
Whatever is done to prices after is up to countries, states, and provinces. As O’Neill no doubt knows—because, like the many other trolls who have attacked Germany with this tired old lie, s/he’s been told many times—Germany adds fees and taxes to electricity to pay for things people need and encourage conservation, while more-nuke-infested, er, invested, France, subsidies electricity.
Wind and solar prices are still falling. Gas not only costs more, and ever more compared to wind and solar, but is volatile, and is both a cause of war and used as a weapon, like nukes—together, used for both terrorism and extortion.
Nukes’ emissions compared to solar and wind are a matter of debate, and a matter of methodology and what’s included. In the short term, including nukes’ longer construction and carbon payback times changes the equation, and in the long term, especially with materials recycling and new revelations about longer wind turbine lives (Michael Barnard, CleanTechnica) solar and wind come out ahead.
Plus, fossil and fissile subsidies and externalities dwarf renewables’, making it a clear choice even without the enormous disadvantages of fossils—climate catastrophe, 10 million deaths a year, many extinctions, and extreme water use—and of nukes—including a deadly legacy and future of disasters and undue burden, equal or greater water use, fuel depletion, and severe security issues. Nukes are a bad deal.