api, this is a great point and one that is often overlooked with most renewables vs non-renewables cost arguments. However, when you compare $/kwh of the electricity it does take all of this into consideration.

I think of renewables' higher cost as basically paying up front for the fuel instead of over time. At least that's how it should be thought of economically.

You're right, but traditional fossil fuel plants still cost a lot (a comparable amount infact) to build ($2billion for 600MW[1]). Renewables just have a much lower energy output (only work when the sun shines/wind blows, and at a lower capacity) and therefore a much longer payback. But you're right, not having to pay for fuel would off-set some of these negatives.

[1] http://www.synapse-energy.com/Downloads/SynapsePaper.2008-07...