Renewables and Electricity Affordability: Untangling Correlation from Causation

Fischer J. Espiritu Argosino and Christopher R. Knittel

December 2025

Rising electricity prices have become a salient policy concern amid broader inflationary pressures in the U.S. economy. Many observers, including policymakers and the public, have attributed these increases to renewable energy policies such as Renewable Portfolio Standards (RPSs) or to the growth of wind and solar generation. Using a panel of U.S. states and a fixed-effects econometric design, we test whether these apparent correlations persist after controlling for time-invariant state characteristics and common temporal shocks. We find that once both state and year effects are included, the association between RPS stringency and retail electricity prices disappears, suggesting that the raw correlation is not causal. Utility-scale wind and solar generation are, if anything, weakly associated with lower prices. Rooftop solar adoption, however, remains positively correlated with rates, likely due to cost-recovery mechanisms embedded in retail tariffs. Beyond renewables, there are two additional factors that may be driving rate increases: climate-driven grid hardening and the rapid growth of data centers. Recent work suggests climate change is a factor; our ongoing work studies the role of data centers. These results highlight the need for equitable rate design and targeted resilience investments rather than a retrenchment of renewable policy.