The unprovoked Russian war against Ukraine has resulted in an electric energy crisis in Europe, in particular in Germany. Because of the escalation between sanctions and gas deliveries, Russia on September 2 for an indefinite time shut down Nord Stream 1, the main pipeline for the natural gas deliveries to Germany. It triggered higher electricity prices not only in Germany but all the surrounding countries. The indefinite time was further extended on September 26 after both Nord Stream 1 and Nord Stream 2 pipelines ruptured after a series of explosions. Added to the serious concerns about exceedingly high electricity prices are now concerns in Germany for the coming winter about grid reliability, as well as for the ability to adequately heat buildings.

However, there is more to the story about the crisis than losing the Russian gas through the Nord Stream pipelines. Germany has been fortunate to be able to import substantial amounts of electricity when short on own generation, but this summer the availability of power to import has been reduced. France, normally the biggest exporter of power in Europe, has had more than half of their nuclear reactors offline due to routine maintenance or to evaluate the risks of corrosion problems. In addition, the record drought in Europe dropped the water levels in many large rivers, not least in France. It reduced the hydro generation as well as put restrictions on the output from some of the nuclear reactors in operation. (The latter is due to limitations of the amount of available/allowed cooling water.)


In 2017 natural gas fired power plants generated 32 % of the electricity in the United States. Coal fired power plants delivered about 30 % of all power, while nuclear delivered about 20 %. Nearly 20 % came from renewable energy sources, out of which 47 % came from hydro power plants and about 37 % came from wind turbines.

Eight years earlier, 2009, when the shale-gas revolution had started to take off, coal was the number one source, 44 % of all electric generation. Natural gas represented 23 % of the generation and nuclear was at 20 %. Renewable generation, basically hydro and wind, produced 10.5 % of the electric power. (EIA data).

Natural gas has replaced coal as the primary source of power generation. Nuclear is basically unchanged at 20 %, while renewables with the growth of wind and solar generation, has doubled and represents about the same proportion of the power generation as nuclear.

In an industry that traditionally changes slow it is a big shift that has happened fast.


In the electric industry, baseload refers to the minimum level demand over 24 hours. The baseload is generally about 30 – 40 % of the peak load. Traditionally the baseload has been served by low cost power generators, operating steadily and continuously.

Coal fired power plants, nuclear, and (depending on geography) hydro have been the backbone of baseload generation. Operating in “baseload mode” is more or less a prerequisite for nuclear and coal-fired power plants. That is because of their high fixed costs and need to run due to long start-up times and limited ability for load-following.

This paradigm has started to change.


The U.S. electric industry is undergoing an unprecedented transformation, in terms of magnitude and speed, from a dominance of coal to more natural gas, wind and solar.

Natural gas fired combined cycle generation has among the lowest levelized cost of electricity (LCOE). Between 2006 and 2014 natural gas prices fell by 34 %. Meanwhile the average retail electricity price rose by 17%, which is about the same rate as consumer price index during this period. Only one state, Texas, saw a significant decrease, 13 %, in retail electricity prices.

It triggers the question: Do lower energy costs also mean lower electricity prices for the consumers? The question is straightforward. The answer is more complicated. It is “Yes and No”. Let’s elaborate by looking at available data for the last 10 years.