Expensive State Clean Energy Mandates: The Math Nobody Ran

Thirteen states from Vermont to Hawaii have written a hard deadline into law: 100 percent carbon-free (CO2-free) or “clean” electricity, most by 2040 or 2045. Lawmakers sold these mandates as a bargain: cheaper power alongside cleaner air. Voters in those states are struggling with ever-increasing electricity bills. Which are increasing faster than non-mandate states.

The metric politicians lean on to make that case is the “levelized cost of energy” (LCOE), which ranks wind and solar as the cheapest sources of generation on the grid. The U.S. Energy Information Administration itself cautions that the ranking is misleading because LCOE reflects the cost to build and run a single generator. It says nothing about whether that generator can deliver power at 6 p.m. on a windless February evening, exactly when a grid needs it most.

Energy analysts, Isaac Orr and Mitch Rolling, answer the question EIA’s own number dodges. Their “Always On Levelized Cost of Energy” (AOLOC) model adds back everything a bare LCOE figure leaves out: backup generation, transmission, overbuilt capacity and the power curtailed to keep intermittent resources reliable.

Run through Minnesota’s grid, the model puts wind’s real cost at roughly $272 per megawatt-hour and solar’s at $472. Treat those as modeled estimates, not quoted market prices, but they are the most honest attempt anyone has made to price what these mandates actually cost.

Set those figures next to new natural gas plants, a resource that needs no matching backup fleet and can be built wherever demand is, saving transmission buildout, rather than wherever the wind happens to blow, which needs vast amounts of expensive transmission.

EIA’s own projection for gas entering service in 2030 runs $46 to $49 per megawatt-hour, and an already-paid-off coal plant costs less still. Counted fully, wind runs at least double. Solar runs at least triple.

Minnesota is where the theory meets the invoice. Its 100 percent carbon-free law passed in 2023, and the state’s largest utility, Xcel Energy, has since asked regulators to approve $490.7 million in rate increases across 2025 and 2026, a 13.2 percent jump it partly attributes to cleaner generation investments. Regulators trimmed that to a 5.2 percent interim increase but did not reverse the direction.

Twelve more states carry the same 100 percent commitment on their books. Together, representing more than a quarter of the nation’s electricity use, they all lean on the same LCOE sales pitch that Minnesota did.

A nationwide review of utility rate filings by Orr and Rolling already shows the pattern in the data: states with these mandates sought rate increases 32 percent larger than states without them from 2020 through 2025, with prices climbing at nearly double the pace of non-mandate states, despite slower population growth.