Saying that one form of energy is “cheap” is, most of the time, misleading. Yet beyond disputes over specific technologies, pricing energy remains the crucial issue. Strictly accounting-based calculations have pushed us into Russia’s arms and now risk keeping us dependent on China. Photovoltaics must factor in security costs, while nuclear power must factor in flexibility and system management costs. And these costs cannot be allocated by the government, but must be distributed through market mechanisms.
Europe must accelerate renewables not only for climate reasons, but for strategic ones, Frans Timmermans argued in Bucharest at the Economist Romania Government Roundtable. Europe’s future sovereignty depends on reducing vulnerabilities and expanding electricity production fast. In his view, that means massive investment in renewables, supported by an energy union, a capital markets union and a pan-European grid. Former Executive Vice-President of the European Commission for the European Green Deal, Timmermans put it simply: “There is no cheaper energy than solar energy. […] And it’s getting cheaper by the day.”
He later reinforced his position when addressing Cosmin Ghiță, CEO of Nuclearelectrica: “Whatever you do, whatever you tell us here today, there is on the planet no cheaper energy.”
Ghiță does not deny the extraordinary cost decline of renewables. On the contrary, he acknowledges it explicitly and even thanked Timmermans for policies that helped drive installed costs down from around EUR 6 million per MW in 2011 to below EUR 1 million per MW today, while also improving capacity factors. His counterargument, however, was that the apparent cheapness of solar becomes far less straightforward once the system as a whole is taken into account. Nuclear, he argued, should be assessed not by sticker price alone, but by the intensity of subsidy per MWh delivered, by its high capacity factor, by its ability to provide baseload power, and by the industrial, strategic and social externalities it generates. In that broader calculus, he suggested, nuclear may prove cheaper than it first appears.
Two methods of valuation
“The earth is long – no, wide,” the poet says, just to show how impossible the choice is, and moves on. In much the same way, the real substance of the exchange between Timmermans defending solar and Ghiță defending nuclear was a collision between two methods of valuation.
Timmermans’ position was deliberately practical. Europe, he said, cannot afford to let ideology govern its choices. “Do the numbers,” he insisted repeatedly. Yes, he admitted, nuclear will be needed. But he warned against replacing one ideological reflex with another. In one of the most striking moments of the panel, he acknowledged that his own generation had once opposed nuclear for ideological reasons: “I’m of an age that as a student we went out to protest against nuclear energy. That was an ideological choice. Don’t make the mistake of doing that ideological choice now the other way round.” He coupled that admission with a hard-nosed objection: he has yet to see a nuclear project delivered on time and on budget, and he remains skeptical about the near-term commercial reality of SMRs.
Ghiță answered that challenge directly. Romania, he said, already has such an example “in our backyard”: Cernavodă Unit 2, built, in his account, on budget and with only a three-month delay. More broadly, he argued that projects can remain under control when countries retain command over supply chains, regulation and execution. He also pushed back against the use of LCOE or raw CAPEX as sufficient benchmarks, stressing that other metrics are increasingly used in the United States because electricity cannot be valued by production cost alone. If a technology brings dependable output, supports industrial demand, creates local capabilities and reduces strategic vulnerability, that value must also enter the equation.
What is beyond the slogans
Once one moves beyond slogans, “the cheapest energy” becomes a much harder claim to sustain with intellectual honesty. Cheap for whom? Cheap at what hour? Cheap at the plant gate, or cheap for the consumer in a system that must remain stable under stress? Cheap on a sunny day with surplus output, or on a windless winter evening? Cheap before balancing costs, storage costs, backup capacity, network reinforcement and negative-price episodes are counted, or after? Cheap if one excludes subsidies, or cheap if one includes them? And if subsidies are included, over what time horizon – and does one count only direct budget support, or also regulated priority, support schemes, public guarantees and industrial policy spillovers?
The panel itself offered elements of that wider answer. Ghiță argued that nuclear’s economic meaning cannot be detached from energy security, industrial policy, education, localization and system resilience. Bogdan Badea, President of the Board of Directors of Hidroelectrica, complicated the picture further by warning that, while solar may be the cheapest technology in CAPEX terms, it can become a “poisoned apple” operationally if the system lacks balancing, storage and dispatchable support. He explicitly noted that solar is the cheapest in CAPEX terms, but that more solar and wind require hydro, pumped storage and other balancing resources if the system is to absorb them effectively. Varinia Radu, co-founder and chief executive of Energynomics, sharpened the same point when she observed that solar is cheapest in CAPEX terms, yet operationally becomes more expensive in a system marked by negative prices, congestion and the need for grid optimization.
The answer comes from the market, when it is sensitive enough
It is clear, by now, that production cost alone is too narrow a benchmark for something as socially and economically central as electricity. For the consumer, its value is inseparable from availability, predictability, flexibility, security of supply, transmission adequacy and the cost of keeping the entire system standing when the cheapest marginal producer is absent. The more technologically diverse and institutionally complex the system becomes, the more hazardous it is for any one person, regulator or ideology to declare with certainty that energy “should” cost a specific amount.
It is precisely here that energy policy becomes dangerous when it tries to substitute administrative certainty for market discovery. In a system this complex, interventions designed around one metric can easily produce unintended consequences elsewhere: distorted price signals, underinvestment in balancing assets, dependence on foreign supply chains, stranded capacity or new forms of strategic vulnerability.
The current crisis, like all crises, tempts each of us into philosophy. But one practical conclusion emerges from the exchange in Bucharest at the Economist Romania Government Roundtable, an event organized in partnership with RCI Holding România: the more variables matter, the less credible becomes the claim that a single planner, ideology or technology camp can define in advance the “true” price of energy.
The market is not perfect. But it is the only mechanism capable of aggregating, however imperfectly, the dispersed information embedded in technology costs, timing, intermittency, scarcity, flexibility, subsidies, security risks and consumer preferences. Administrative intervention remains necessary at the margins, especially where long-term investment, decarbonization and security are involved.
What Timmermans versus Ghiță ultimately revealed is that the real argument is not whether solar or nuclear is “the cheapest.” It is that energy pricing is inseparable from system design, and system design is inseparable from values, institutions and time horizons. That is why this argument so easily becomes ideological. And that is why the markets should remain, as much as possible, exposed to the discipline of free choice and competition, while still being shaped by strategic decisions and informed calculations.
