Above, Senator Sheldon Whitehouse explains the “Generation Stack” – the least expensive sources come on line first as demand goes up – and that means clean energy, solar, wind and battery are the cheapest options.
The price of electricity in this scheme is set by the last, and highest priced, generator to go online – which is usually a fossil fuel unit.
Confirming that, Joe Dominguez, CEO of Constellation Energy, one of the nation’s largest utility generators, confirms that “gas sets the price for electricity 90 percent of the time.”
FYI
US Energy Information Administration:
We expect the U.S. benchmark natural gas spot price at the Henry Hub to decrease about 2% to just under $3.50 per million British thermal units (MMBtu) in 2026 before rising sharply in 2027 to just under $4.60/MMBtu, according to our January Short-Term Energy Outlook (STEO). We expect the annual average Henry Hub price in 2026 to decrease slightly as annual supply growth keeps pace with demand growth over the year. However, in 2027, we forecast demand growth will rise faster than supply growth, driven mainly by more feed gas demand from U.S. liquefied natural gas (LNG) export facilities, reducing the natural gas in storage. We forecast annual average spot prices will decrease by 2% in 2026 and then increase by 33% in 2027.
In the above figure, each dot represents a power plant, and they are sorted in ascending order of marginal cost. You should be able to see some patterns. In green, we have the renewable generation, which has very low marginal costs. This should make some sense – hydro, solar, and wind power get their “fuel” – rainfall, the sun, and the wind – for free, so the marginal cost of producing a little bit more hydro, solar, or wind power is essentially zero. In purple, we have nuclear power, which has a pretty low marginal cost, because the fuel contains a very large amount of energy for a small mass. The black units are coal-fired. Coal has a variety of components to its marginal cost – most of the cost is fuel, but these plants also have to either buy emissions permits or run emissions-control equipment, which raises costs. In blue, we have natural gas units, which are typically more expensive to run than coal units because natural gas is normally more expensive than coal. At the top of the stack, in red, we have oil-powered units. These are generally very small, so they are not very efficient, and oil costs a lot of money today, so these units can be very expensive – in this case, about 6 to 10 times as expensive as a typical coal unit.
Kind of gives the lie to talk of nuclear being the most expensive power source. I’m not sure what prices grid scale batteries bid into the power auctions at, but the California Independent System Operator, despite having the largest battery capacity outside China, still ran gas for 72 of the last 72 hours, so every producer – nuclear, geothermal, hydro, wind, solar – should get the same (high) clearing price per megawatt-hour.
almost all US nuclear plants are long ago fully amortized, in many cases having been sold and resold by troubled utilities for pennies on the dollar – so the cost is just fuel, operation, maintenance, the construction costs do not figure in.
So just running them is pretty cheap, maybe, I have heard, 2-5 cents kw/hr.
Now, NEW nukes, that’s a different cat – Vogtle is the only new build, and that’s coming in at more than 18 cents a kw/hr.
No one is suggesting that other new builds will be a whole lot cheaper until SMRs get way down the cost curve, maybe by mid century, fingers crossed.
Others are suggesting SMRs will never come down in price. Michael Barnard, Bent Flyvbjerg, for instance. They’re more credible, since they’re experts and not basing everything on wishing.
IMO, Chinese companies would have the only plausible shot at making SMRs cost-effective.