Residential electricity prices have increased 6.2 percent over the past year, prompting a debate about the role of renewable energy adoption in driving up costs. Some claim renewables make electricity more expensive, while others argue renewables cut costs or are not the main driver of recent increases. This brief examines the evidence to clarify whether renewable energy adoption is linked to rising electricity prices. 

What is Renewable Energy?

Renewable energy comes from sources that can naturally replenish themselves, such as wind and solar, while clean energy refers to energy sources that produce minimal or zero greenhouse gas emissions (e.g. nuclear energy). Currently, renewable energy accounts for 25 percent of electric generation in the United States, with wind and solar accounting for the largest share. Renewables contribute to meeting electricity needs across all sectors: approximately 40 percent of total electricity serves the Electric Power Sector, followed by the Industrial, Transportation, Residential, and Commercial sectors. The energy demand in the United States is projected to continue increasing, driven by data centers and AI. 

Figure 1. EIA, 2025 

Electricity Prices and Influence Factors

Electricity Prices generally reflect the cost of building, financing, maintaining, and operating power plants and the electricity grid. They are influenced by different factors such as fuel source, power plant costs, transmission and distribution system, weather conditions, and regulations. All electricity consumers are affected by price changes, with low-income households particularly sensitive to price changes.

Analyzing the Impact of Renewables on Energy Prices

Proponents of this view argue that as the relative amount of renewable energy–primarily solar and wind–grows, the impact on electricity prices grows as well. They point to countries that have added the most solar and wind as also having elevated power costs. 

However, empirical evidence does not support a consistent correlation. An IMF study of European markets found that renewable-based energy actually lowers the average level of wholesale electricity prices. In the United States, data from 2010 onward shows no correlation between renewable adoption and utility rate increases; states with the largest growth in wind and solar generation—including Iowa, New Mexico, Kansas, and Oklahoma—have seen rates rise slower than inflation.

To test this claim with national-level data, this brief examines the relationship between wind and solar generation and electricity prices from 2000 to 2024, using inflation-adjusted prices to account for the change in purchasing power of the dollar over time. Figure 2 presents these findings. Panel A shows that while wind and solar generation increased 97-fold (from 0.16 percent to 15.61 percent of total electricity generation), real electricity prices increased by only 5.9 percent. Nominal prices reflect what consumers actually paid at the time of sale, without adjusting for inflation. Using nominal prices, electricity appears to have increased 91 percent from 2000 to 2024—a misleading figure that reflects general inflation rather than renewable energy impacts. Panel B demonstrates that no statistically significant correlation exists between renewable energy adoption and real electricity prices.

Figure 2. EIA, 2025, EIA, September 2025 & BLS, 2025

A related concern is intermittency: critics argue that because solar and wind cannot provide power on demand, utilities must maintain fossil fuel backup capacity, making their advertised levelized cost of energy (LCOE)–the average cost per unit of electricity over a power plant’s lifetime–much higher. However, research from the National Renewable Energy Laboratory (NREL) indicates that investing in battery storage is increasingly cost-effective. As battery technology advances and scales up, costs associated with renewable energy storage will continue to decline, further supporting the transition to a more sustainable energy grid.

Other Factors May Be Driving Price Increases

Wind and solar have very low operating costs once built and aren’t subject to fuel price swings. States with substantial renewable energy often have lower or average electricity rates (shown in Figure 3), suggesting that other factors—not renewable energy adoption—are leading to electricity price increases. 

Figure 3. Energy Innovation, 2024

Policy choices also influence rates. Research on the Inflation Reduction Act (IRA) shows that clean energy tax credits reduce wholesale and retail electricity rates. Conversely, studies conducted before the 2025 One Big Beautiful Bill Act (OBBBA) passage found that repealing these credits would increase consumer electricity bills by shifting the system toward greater reliance on natural gas, exposing consumers to fuel price swings. 

At the same time, research identifies two primary drivers of rising electricity prices that are unrelated to renewable energy: aging grid infrastructure requiring costly repairs, and climate-related damage from wildfires and severe storms that utilities pass on to consumers.

Conclusion

Available evidence does not support a direct link between renewable energy adoption and rising electricity prices. Analysis of data from 2000-2024 reveals no statistically significant correlation between wind and solar generation growth and inflation-adjusted electricity prices, despite a 97-fold increase in renewable generation. The modest 5.9 percent real price increase over 24 years suggests that concerns about intermittency and backup costs have not manifested as significant price increases at the national level.

Multiple factors influence electricity prices beyond renewable energy adoption, including infrastructure maintenance, weather-related damage, fuel price volatility, and policy changes.