From Watts Up With That?

By Andy May

There have been many attempts to compare wind and solar power generation to generation with natural gas and other fossil fuels. I have summarized and criticized these attempts before, see here and here.

Another excellent discussion of the topic is in this TPPF report by Michael Reed and Brent Bennet. Reed and Bennett estimate that modifying the Texas grid to handle wind and solar output variability cost Texas electricity consumers $2.3 billion in 2023.

The purpose of this post is not to cover the whole issue, as Reed and Bennett do, but only discuss how to account for the natural gas swing generation used to backup wind and solar when these sources are unavailable, like on windless nights. The power one can produce using wind turbines and solar panels varies a lot from place to place and from time to time. Figure 1 shows the mix in Texas on 27 January 2026 at 12:21PM.

Texas, as a state, ranks #1 in wind generated power, #2 in solar, and #1 in net annual overall electricity generation. As you can see in figure 1, sometimes, on a clear day, with sufficient wind, solar and wind power supply much of the electricity used in Texas.

Texas generates over 500 TWh (terawatt-hours) of electricity (588 TWh in 2025). According to ERCOT natural gas accounts for about 41% of Texas electricity production and most of that is from natural gas combined cycle (NGCC) generators. Wind is about 24%, solar 14%, and nearly all the rest is from coal (13%) or nuclear (9%).

Wind and solar are intermittent sources and can fall to zero production without warning. Coal and nuclear are only adjustable within certain limits, neither can change their electrical output quickly or by very much. Coal and nuclear can ramp up or down by as much as 1-3% per minute or so with care, but they are not well suited to rapid response.

Only natural gas generators and batteries can change output quickly and by large amounts, they are the swing generators. Natural gas plants can start up in minutes and ramp at 20% to 50% per minute.

Battery storage systems have exploded within ERCOT, and they provide the fastest response, on the order of milliseconds. As a result, they act as ultra-fast swing resources. However, for sustained emergencies (more than 1-2 hours) natural gas plants dominate.

They are also the only generators that do not require outside backup, since they are their own backup. If they run at 80% of capacity, they can ramp up and down with demand. They are an ideal partner for coal and nuclear.

Who pays for backup reserve power?

Given that NGCC can provide their own backup power, their backup costs are logically zero. Battery storage (or “BESS”) systems are only for backup and cannot provide base load as their effective time on the grid is very short, less than two hours for most systems.

Their advantage is they can provide emergency power almost instantaneously. But they must be recharged and kept fully charged, so they do have a fuel cost. Table 1 compares all these commonly used systems and provides a total cost for each per megawatt-hour (MWh) of produced electricity.

Lifetime capital cost at 7%

As you can see in Table 1, I compute the installation cost in dollars per MWh (Megawatt-hours) of electricity produced. It includes equipment and installation costs amortized at a 7% annual annuity rate, over the expected lifetime of the installation. The numbers given are for Texas in the 2023 to 2025 years and they are in the range of those reported by NREL, Lazard, and EIA. The range of costs per MWh for wind and solar are extremely variable since they change a lot by location and by production per year assumed.

Texas wind generation has a cumulative capital investment of $55.6B, a 40.7GW generation capacity, with a 33.6% capacity factor, and a 25-year lifetime, so using a 7% annuity discount yields a $39.80/MWh discounted cost, not counting subsidies, which are about $10 per MWh. The full range of costs in the sources cited above is from $20 to $86 per MWh, which is so large as to be meaningless. One of the reasons I chose to focus on Texas is it narrows the range.

In Texas, a very sunny state, I derived a value of $40 per MWh for solar. Again, the values from NREL, Lazard, and EIA are all over the place and range from around $25-$45 per MWh. We used an installed capacity of 16 GW, a 23.5% capacity factor, an equipment cost of $21.5B, and a 27-year lifetime to get $40/MWh.

Most of the Texas fleet of natural gas generators are the efficient combined-cycle type (NGCC). These high efficiency, fast spin up generators use a natural gas burner to spin a gas turbine and then use the excess generated heat to spin a steam turbine for extra electricity output.

They are the most flexible and efficient electricity generators, and they provide their own backup because they can be throttled down quickly when demand is lower and then quickly spun up when demand rises. Their only downtime is for maintenance, which can be planned for. Texas also has some conventional natural gas generators which are normally offline and are used as “peakers” to supply extra power at peak demand or on windless and cloudy days or at night.

NGCC plants are often throttled back to use wind and solar power on good days, because once installed and operating their fuel is free. This causes NGCC plants to have an artificially low utilization rate. But comparing actual NGCC utilization to solar and wind capacity factors is misleading, since the NGCC low utilization is a choice, and not forced by weather.

An NGCC utilization rate of 80%, absent solar and wind is reasonable because this rate allows for maintenance time and can provide a backup spinning resource for emergencies. Thus, rather than using the actual utilization rate for our comparison I used 80% and a 27-year lifetime. This lowers the cost/MWh significantly from other published amounts and results in $25.30/MWh.

Subsidies

Texas doesn’t have any significant electrical plant subsidies, although some local communities may offer tax abatements to attract a facility, these are offered to all types of energy plants, so we will ignore them. The federal subsidies are specific as to the type of energy produced.

For wind we use $9.95/MWh, which aligns reasonably well with the TPPF and EIA estimates. Our solar estimate of $25/MWh is a little high, since the national estimate by TPPF is $18-$20, but various LCOE sources (see Lazard here, page 9) suggest the number is $25-$40, thus $25 falls in the middle. Solar subsidies are higher than for wind in absolute terms and made higher per MWh because solar has a lower capacity factor than wind.

NGCC electrical power receives almost no subsidies in the U.S., the range in the literature is between $0.50 and $1/MWh, and we use one dollar. These are not direct subsidies, like wind and solar receive but upstream tax preferences that some call subsidies, I didn’t want to get into that debate here but have discussed the issue previously.

Operation and maintenance costs (O&M)

All electricity production facilities require ongoing maintenance, repairs, insurance, and must lease or buy the land they stand on.

These costs are not as complex as those discussed previously and we use standard numbers here, $15.29/MWh for wind (published range ~13-17), $9.50/MWh for solar (published range ~7-12), and $6.60/MWh (published range $3-$5, ours is higher due to higher utilization (80%) for NGCC. NGCC gets a break on O&M because the land it uses is very small and the facility is enclosed so the equipment is not exposed to the elements.

Backup costs

The backup costs for intermittency (sometimes called renewable integration costs, grid balancing costs, or grid firming costs) are from TPPF and EIA. Failures of solar and wind generation that require backup are windless days, nighttime, and cloudy days. The backup costs are not paid for by the solar and wind facilities but spread out across the whole grid as increased charges to consumers.

In a 2025 TPPF analysis, the use of wind and solar caused the extra procurement of $788 million of power in 2023, which is roughly $6.30/MWh. The broader impact was in grid improvements to accommodate wind and solar generation, these cost $2.3B in 2023 or $18.40/MWh. Overall, according to TPPF (Bennet & Piracci, 2026), after adjusting for inflation and increasing electricity demand, ERCOT has paid 57% more in electricity transmission charges than in 2010.

This is over one billion dollars per year to support solar and wind generation. Thus, the charges are not just for the electricity purchased to backup solar and wind facilities in unfavorable weather conditions ($6.30), but also the required changes to the transmission grid ($18.40). These values total $24.70 and are the total required for both wind and solar. Wind has a capacity factor of 33.6% and solar 23.5%, thus dividing by this ratio seems reasonable. It results in a wind backup cost of $7.42/MWh and a solar cost of $17.27/MWh.

Fuel

Fuel is free for wind and solar once installed and operational. The fuel for natural gas combined cycle is about $30/MWh. Assuming a battery round trip efficiency of 85-90% for the battery electricity (or energy) storage system (BESS) units and that they are charged with natural gas power, the fuel cost for the battery units is about $31/MWh. This is really the only fair way to compare the battery backup units, since they would not be needed if solar and wind were not in the mix.

BESS

The battery energy storage systems put into place in ERCOT and elsewhere in the country are useful short-term backup systems because they can supply electricity in milliseconds as needed. However, for longer blackouts, longer than about two hours, they will not work. However, as noted above, if it were not for solar and wind, they would not be needed. NGCC and regular natural gas generators can provide their own backup by throttling them back and allowing their output to go up and down with demand. Coal and nuclear are best as baseload producers.

Discussion

Adding federal subsidies to the discounted capital cost and the operational cost we reach the estimated full cost of the power source. This is $65.04/MWh for wind, $74.50 for solar, $32.90 for NGCC, and $79.00 for battery backup. Once the backup costs and fuel are added, we have a total cost of $72.46 for wind, $91.78 for solar, $62.90 for NGCC and $110.00 for battery backup.

Using this methodology, natural gas is the cheapest electricity, batteries are the most expensive, and solar is the second most expensive. In a sense this is misleading since if it were not for solar and wind, batteries would not be needed except for users that cannot stand an outage of a few minutes. Those customers could supply their own battery backup. Natural gas generators can ramp up to cover problems in a few minutes at most.

This sort of analysis is subjective in part and is always very controversial and open to debate, but it seems clear to this observer that wind and solar are not a net addition to the Texas grid, but a burden on it. Clearly the most efficient way to supply energy is with a coal and nuclear base power system with NGCC as a swing element to handle changes in demand and emergencies. Batteries will be needed by some customers but let them buy their own systems.

Works Cited

Bennet, B., & Piracci, J. (2026). The Explosion of Transmission Costs in ERCOT: Causes, Forecasts, and Policy Solutions. TPPF. Retrieved from https://www.texaspolicy.com/the-explosion-of-transmission-costs-in-ercot-causes-forecasts-and-policy-solutions/

Bennett, B. (2024). The Siren Song that Never Ends:Federal Energy Subsidies and support from 2010 to 2023. TPPF. Retrieved from https://www.texaspolicy.com/wp-content/uploads/2024/10/2024-10-LP-Federal-Energy-Subsidies-BrentBennett_FINAL-1.pdf

EIA. (2023). Federal Financial Interventions and Subsidies in Energy in Fiscal Years 2016-2022. Retrieved from https://www.eia.gov/analysis/requests/subsidy/pdf/subsidy.pdf

EIA. (2025). Levelized Costs of New Generation Resources in the Annual Energy Outlook. EIA. Retrieved from https://www.eia.gov/outlooks/aeo/electricity_generation/pdf/AEO2025_LCOE_report.pdf

ERCOT. (2026). Fact Sheet. Retrieved from https://www.ercot.com/files/docs/2022/02/08/ERCOT_Fact_Sheet.pdf

Lazard. (2025). Lazard’s 2025 LCOE. Retrieved from https://www.lazard.com/media/eijnqja3/lazards-lcoeplus-june-2025.pdf

NREL. (2024). Annual Technology Baseline: The 2024 Ele3ctricity Update. Retrieved from https://docs.nrel.gov/docs/fy24osti/89960.pdf

POTOMAC Economics. (2024). 2023 State of the Markey Report for the ERCOT Electricity Markets. Retrieved from https://www.potomaceconomics.com/wp-content/uploads/2024/05/2023-State-of-the-Market-Report_Final.pdf

Reed, M., & Bennet, B. (2025). The cost of wind and solar variability to Texas Ratepayers. TPPF. Retrieved from https://lifepowered.org/wp-content/uploads/2025/02/2025-02-LP-Cost-of-Wind-and-Solar-ReedBennett.pdf