The wind blows and the sun shines, so why does the price of electricity keep going up? Price increases in the face of apparently “free” renewable energy is partly the result of the difference between energy supply and energy capacity. If you think about it in the context of your own home, you can supply energy to your home with rooftop solar, but in order to have that solar energy whenever you want it, you will also need a large set of batteries. The difference in cost between a solar system and a solar + battery system illustrates the cost of capacity.
In essence, electricity is a form of energy that must be used or stored immediately when it is generated. When you switch on your lights or devices, the energy required at that very moment must be produced by a generator or retrieved from a storage source like batteries. At all times, the demand for electricity must be perfectly balanced with this supply from either generation or from storage. Options that can produce energy when it is needed are "capacity."
With more uncontrollable (“non-dispatchable”) generation sources like solar panels and wind turbines, the work to balance the entire system has added complexity because the overall supply becomes less predictable. This means that some controllable (“dispatchable”) generation must be on standby to produce energy when the wind stops blowing or when a cloud suddenly covers the sun. The need for standby capacity does not decrease as more renewable resources come online.
Unlike other forms of energy, electricity does not store efficiently. Although significant improvements have been made, batteries and other forms of electricity storage (such as hydrogen or pumped-hydro) remain inefficient because the amount of electricity that goes in does not equal the amount of electricity that comes out. Additionally, all storage options can be incredibly expensive.
Typically, the most cost-effective solution is to keep fossil generation plants on standby that can ramp up and down quickly to ensure that there is always the right amount of energy in the system. This means that excess generation is required to supply users on the system at any moment, around the clock, and these plants need to be maintained, even if they are used less and less frequently. The only other alternative is to impose demand restrictions: this would mean that the ‘always-there’ model of electricity supply would end.
There are other factors at play around the cost of electricity of course, including the need to replace aging infrastructure, the cost of legacy assets that have not yet been paid for, and the need for new infrastructure to run and connect an increasingly complex system. But the need for capacity is one factor that means electricity costs will not decrease any time soon.