The Biggest Obstacle to a Renewable Energy Transition is Reality 

In the wake of a massive blackout that plunged more than 55 million people into darkness, Spanish elites are working hard to shield the country’s renewable energy strategy. Prime Minister Pedro Sánchez was quick to deny that solar and wind played any role in the collapse, dismissing nuclear energy as outdated. In fact, a sudden drop in solar output, compounded by the grid’s diminished resilience after years of nuclear and fossil fuel retirements, appears to have played a central role in the crisis.

Spain’s blackout is the latest and most dramatic example of a global trend: political leaders are pushing a renewable energy transition heedless of real world consequences. Behind this push are two mutually incompatible visions of the transition—one that imagines renewables will outcompete fossil fuels through innovation, and another that seeks to eliminate fossil fuels by fiat. Both are detached from reality. 

The Demand Fantasy

The International Energy Agency’s Net Zero by 2050 scenario predicts that fossil fuel demand will fall so quickly that oil will drop below $30 a barrel by the 2030s. This, it’s argued, will make renewable technologies the cheaper, default option.

But this is not happening. Even with oil above $80 a barrel in recent years, solar and wind have failed to displace fossil fuels at scale. Why? Because while their nominal costs are falling, their true costs—the externalities they impose on the power sector in terms of intermittency, storage, backup, and grid integration—remain high.

Consider capacity factors: a typical solar plant in Europe or the U.S. operates at around 24% of its nameplate capacity. That means a 100 MW solar facility delivers, on average, just 24 MW—and often far less during critical evening or winter periods. Natural gas and nuclear plants, by contrast, often exceed 90% capacity utilization.

Grid operators must plan for peak demand on the worst days—not the average. Intermittent sources perform worst when reliability matters most. That was the case in Spain, where solar output fell rapidly in the late afternoon. Without adequate nuclear or fossil power to compensate, the grid collapsed.

The Supply Illusion

In the absence of a smooth market transition, many climate advocates argue that governments should accelerate the shift by cutting off fossil fuel supply—banning drilling, retiring plants, and restricting production.

But this strategy fails when energy alternatives are not yet ready. Curtailing fossil fuels without sufficient substitutes leads to price spikes, blackouts, and political blowback. The poor suffer most. Higher energy costs raise food prices, strain transportation systems, and reduce industrial output.

The U.S. offers a clear case. In 2021, President Biden backed away from a modest gas tax hike when prices hit $3 per gallon, but instead proposed to decarbonize the entire power sector through measures that would have been far more costly to workers, but whose costs could be hidden until it was too late. 

Even if the strategy had worked, and thank God it did not, it would have had no benefit for climate unless China, India, and other countries of the global south follow suit. And they have no intention of following suit. China is currently building more coal plants than exist in the entire United States. India has declared it will not compromise growth for emissions goals.

Constraining the supply of a commodity for which demand is inelastic does not create substitutes. It creates scarcity—and windfall profits for energy companies. 

The Permitting Wall

Even if the economics worked, and even if supply could be restricted without hardship, the transition still faces another obstacle: permitting.

The scale of infrastructure needed is enormous. According to the Electric Power Research Institute, the U.S. would need scores of new nuclear plants, thousands of utility-scale solar and wind facilities, and hundreds of thousands of miles of new transmission lines to meet its clean energy targets.

But the U.S. permitting system makes that all but impossible. Projects face years-long delays. Agencies require exhaustive environmental reviews, and even minor errors can lead to lawsuits that vacate approvals. Local opposition often halts projects, regardless of national importance.

In 2024, for example, the U.S. retired 8.45 GW of coal capacity. It added 13 GW of solar and 4 GW of batteries. On paper, that’s a net increase. But in terms of reliable, dispatchable power, it’s a decline. Solar’s capacity factor is far lower than coal’s. And batteries can’t generate power—they can only store what’s already there.

Europe faces similar constraints. Germany has struggled for years to build a north-south transmission corridor to move wind power from the North Sea to industrial regions. Italy’s offshore wind projects are bogged down in litigation and red tape. Across the continent, green energy projects are blocked by environmental NGOs and local opposition—often using the same legal tools once aimed at fossil fuels.

Grid Instability: The Cost of Intermittency

As intermittent renewables displace dispatchable power, grid stability suffers. The North American Electric Reliability Corporation (NERC) warns that U.S. power systems are approaching a crisis point. Coal and nuclear retirements are outpacing new gas and storage. Meanwhile, demand is rising sharply due to the electrification of vehicles, heating, and data centers.

In 2024, the U.S. saw a net gain in generation capacity, but much of it came from sources that cannot deliver consistent power. NERC warns that several U.S. regions will face supply shortfalls and dangerous blackouts starting this summer. Europe faces similar dangers. With nuclear and fossil fuel plants being phased out and renewable capacity ramping up, the grid is increasingly exposed to instability and supply constraints. 

A Reckoning with Reality

Spain’s blackout is a wake-up call for Europe. The renewable transition is not failing because of denial, fossil fuel lobbying, or lack of funds. It is failing because the governing assumptions—about cost, scalability, reliability, and public support—are increasingly detached from reality.

Without reckoning with that complexity, we risk building an energy future that looks beautiful on paper, but collapses in the real world, like Spain’s electricity grid.