Column: 'Cheap' renewable energy doesn't mean cheap electricity

Former Virginia energy official explains how electricity prices are actually determined in the regional grid.

Mar. 14, 2026 at 10:05pm

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In this opinion column, Glenn Davis, the former director of the Virginia Department of Energy, argues that the common narrative about renewable energy being 'almost free' to produce is misleading. Davis explains that in the PJM regional electricity market, which serves Virginia, the price consumers pay is set by the last and most expensive generator needed to meet demand, usually a natural gas plant, rather than the low or zero marginal cost of renewable energy sources like wind and solar.

Why it matters

This column provides important context around how electricity pricing works in Virginia and the broader PJM region, countering the oversimplified view that renewable energy automatically translates to lower consumer electricity bills. Understanding the market dynamics is crucial as policymakers and the public evaluate the affordability of the state's energy transition.

The details

Davis explains that while wind and solar have very low marginal costs since they don't require fuel, they are still paid the same market-clearing price as other generators in the PJM system, usually set by natural gas plants. This is because PJM operates a competitive wholesale market with a single clearing price. Even though renewable generators may bid at or near $0, they are still paid the higher market rate, not their own low bids. The 'merit-order effect,' where adding low-cost renewables can push out more expensive generators, has a limited impact on overall prices.

  • This column was published on March 14, 2026.

The players

Glenn Davis

The former director of the Virginia Department of Energy and former member of the Virginia House of Delegates, who is an energy policy strategist specializing in electricity markets and grid policy.

PJM

The regional transmission organization that operates the power grid serving 13 states, including Virginia, and runs a competitive wholesale electricity market.

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What they’re saying

“Few ideas in today's energy debate sound as reassuring, or as misleading, as the claim that wind and solar power deliver electricity at 'almost no cost' because they have no fuel expense.”

— Glenn Davis, Former Virginia energy official

“In practice, renewable facilities receive the same hourly market price that gas plants set.”

— Glenn Davis, Former Virginia energy official

The takeaway

This column highlights the importance of understanding the nuances of electricity market dynamics, rather than relying on oversimplified narratives about the costs of renewable energy. As Virginia continues its energy transition, policymakers and the public will need to carefully evaluate the true impact on consumer electricity prices, which are determined by complex regional market structures, not just the marginal costs of different generation sources.