Solar and wind power make electricity more expensive—that’s a fact

As a new year dawns and winter takes hold, it’s worth considering the cost of energy. After a meeting in Italy last spring, the G7 countries (including Canada) pledged to triple renewable energy sources (e.g. wind, solar) globally to ensure an “affordable” energy future. But while direct costs for wind and solar are dropping, they remain expensive due in part to the backup energy sources required when renewables are not available.

In short, an “affordable” energy future is incompatible with increased reliance on renewables. Here’s why.

Wind and solar energy are intermittent, meaning they aren’t consistently available, so we need an alternative power source when there’s no sunlight or wind given the current limited ability to store energy from solar and wind. So we must maintain enough energy capacity in a parallel system, typically powered by natural gas. Constructing and upkeeping a secondary energy source results in higher overall energy costs because two energy systems cost more than one. Therefore, when evaluating the costs of renewables, we must consider the costs of backup energy.

Often, when proponents claim that wind and solar sources are cheaper than fossil fuels, they ignore these costs. A recent study published in Energy, a peer-reviewed energy and engineering journal, found that—after accounting for backup, energy storage and associated indirect costs—solar power costs skyrocket from US$36 per megawatt hour (MWh) to as high as US$1,548 and wind generation costs increase from US$40 to up to US$504 per MWh.

Which is why when governments phase out fossil fuels to expand the role of renewable sources in the electricity grid, electricity become more expensive. In fact, a study by University of Chicago economists showed that between 1990 and 2015, U.S. states that mandated minimum renewable power sources experienced significant electricity price increases after accounting for backup infrastructure and other costs. Specifically, in those states electricity prices increased by an average of 11 per cent, costing consumers an additional $30 billion annually. The study also found that electricity prices grew more expensive over time, and by the twelfth year, electricity prices were 17 per cent higher (on average).

Europe is another case in point. Between 2006 and 2019, solar and wind sources went from representing around 5 per cent of Germany’s electricity generation to almost 30 per cent in 2019. During that same period, German households experienced an increase in electricity prices from 19.46 cents to 30.46 cents per kilowatt hour—a rise of more than 56 per cent. This surge in prices occurred before the war in Ukraine, which led to an unprecedented price spike in 2022.

For Canada, the outlook is also dire. In a recent report, TD Bank estimated that replacing existing gas generators with renewables (such as solar and wind) in Ontario could increase average electricity costs by 20 per cent by 2035 compared to 2021. In Alberta, electricity prices would increase by up to 66 per cent by 2035 compared to an scenario without changes. These increases are on top of the 15 to 20 per cent increase in average generation costs expected by 2035 under current government policies.

Clearly, when accounting for backup costs, renewable-powered electricity is more expensive than fossil fuels. Policymakers in Ottawa and across Canada must recognize that integrating renewables into electricity grids can lead to significant price increases for consumers, and they should be honest about that fact with Canadians in 2025 and beyond.

Julio Mejía

Policy Analyst

Elmira Aliakbari

Director, Natural Resource Studies, Fraser Institute

Related Topics:#AffordableEnergy #ElmiraAliakbari #FraserInstitute #JulioMejía #SolarPower #WindPower Energy

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Ontario suspends electricity surcharge after Trump doubles tariffs

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Ontario suspends electricity surcharge after Trump doubles tariffs

Published on March 11, 2025

Todayville

MxM News

Quick Hit:

Ontario Premier Doug Ford announced Tuesday that the province is suspending its 25% surcharge on electricity exports to the U.S. following President Trump’s decision to double tariffs on Canadian aluminum and steel.

Key Details:

Ford confirmed Ontario’s suspension of the electricity surcharge after Trump’s tariff escalation put Canadian industries under pressure.
The Ontario premier said he and Lutnick would meet with U.S. Trade Representative Jamieson Greer on Thursday in Washington to discuss a “renewed USMCA.”
In a statement on X, Ford acknowledged the move, stating, “In response, Ontario agreed to suspend its 25 percent surcharge on exports of electricity to Michigan, New York and Minnesota.”

Diving Deeper:

Just hours after President Trump doubled tariffs on Canadian aluminum and steel, Ontario Premier Doug Ford announced Tuesday that the province will suspend its 25% electricity surcharge on power exports to three U.S. states. The policy reversal comes as Ontario seeks to avoid further economic retaliation from Washington.

Trump’s latest round of tariffs—upping duties on Canadian steel and aluminum to 50%—were issued in direct response to Ontario’s electricity tax on U.S. consumers in Michigan, New York, and Minnesota. The move threatened to escalate an already tense trade standoff, with Trump warning of additional penalties targeting Canada’s auto sector if broader trade disputes weren’t addressed.

Ford took to X to confirm Ontario’s decision to pull back on the surcharge, saying he had a “productive conversation” with Commerce Secretary Howard Lutnick. The two will meet in Washington on Thursday alongside U.S. Trade Representative Jamieson Greer to discuss a possible “renewed USMCA,” signaling a potential shift in trade relations between the two nations.

“In response, Ontario agreed to suspend its 25 percent surcharge on exports of electricity to Michigan, New York and Minnesota,” Ford and Lutnick stated in a joint announcement.

The suspension of Ontario’s surcharge marks a significant concession in the ongoing trade dispute, which has sent shockwaves through financial markets and rattled Canadian industries. Trump had labeled Ontario’s surcharge an “abusive threat” and pledged to take decisive action to ensure American energy security.

Beyond the immediate tariff battle, Ford’s willingness to engage in talks about a “renewed USMCA” could indicate Canada’s growing concern over Trump’s broader trade agenda. The U.S.-Mexico-Canada Agreement, originally signed during Trump’s first term, remains a key economic framework, but Trump has long criticized Canada’s tariffs on American dairy and its limited contributions to North American security.

While Ontario’s suspension of the electricity surcharge could ease tensions in the short term, the broader U.S.-Canada trade relationship remains in flux as Trump continues pushing for more favorable terms for American industries.

Business

Trump doubles tariffs on Canadian steel and aluminum imports

Published on March 11, 2025

Todayville

MxM News

Quick Hit:

President Trump announced Tuesday an additional 25% tariff on Canadian steel and aluminum imports, raising the total levy to 50%, in retaliation for Ontario’s decision to charge Americans in three border states 25% more for electricity.

Key Details:

Trump declared Ontario’s electricity surcharge on New York, Michigan, and Minnesota as an “abusive threat,” vowing to declare a National Emergency to counteract its impact.
The president threatened to impose a steep tariff on Canadian automobile imports by April 2nd if other longstanding trade disputes aren’t resolved, warning that it could “permanently shut down the automobile manufacturing business in Canada.”
Trump also called out Canada’s minimal contributions to military security, arguing that the U.S. subsidizes the country’s defense by more than $200 billion a year, saying, “This cannot continue.”

Diving Deeper:

President Trump took direct aim at Canada on Tuesday, unveiling an aggressive tariff hike on steel and aluminum imports from America’s northern neighbor. The move raises the current duty by an additional 25%, bringing the total to 50%, and follows Ontario Premier Doug Ford’s controversial decision to slap a 25% surcharge on electricity exports to U.S. border states.

Trump, in a post on Truth Social, blasted Ontario’s move as an “abusive threat” to American energy consumers and promised swift action. “I will shortly be declaring a National Emergency on Electricity within the threatened area,” Trump wrote, saying this would enable the U.S. to “quickly do what has to be done” to counteract Canada’s pricing.

But the trade battle didn’t stop there. Trump also called on Canada to eliminate tariffs of up to 390% on American dairy exports, a policy the president previously fought against during his first term. If Canada fails to act, Trump warned he would ramp up the pressure by imposing new tariffs on Canadian car exports, a move he said would effectively cripple the country’s auto industry.

“If other egregious, long-time Tariffs are not likewise dropped by Canada, I will substantially increase, on April 2nd, the Tariffs on Cars coming into the U.S., which will, essentially, permanently shut down the automobile manufacturing business in Canada,” Trump warned.

In addition to the latest tariffs, Trump took a broader swipe at Canada’s role in global security, reiterating a long-held grievance that the U.S. shoulders an unfair burden for its northern ally’s defense. “Canada pays very little for National Security, relying on the United States for military protection,” Trump wrote. “We are subsidizing Canada to the tune of more than 200 Billion Dollars a year. WHY??? This cannot continue.”

Trump then again floated annexing Canada into the United States to eliminate trade barriers and lower Canadian taxes. “The only thing that makes sense is for Canada to become our cherished Fifty-First State,” he wrote, claiming this would bring economic relief and greater security. “And your brilliant anthem, ‘O Canada,’ will continue to play, but now representing a GREAT and POWERFUL STATE within the greatest Nation that the World has ever seen!”