Nice presentation this week in Lansing by Ryan Wiser of Lawrence Berkeley Lab.
Among the key points worth repeating – the price of fossil gas is a major driver, maybe THE major drivers of higher electric prices.
The alternative story about prices is that it comes from increased demand, but at least for now, the LBNL data does not show that – states that had more demand growth often had lower prices, or lower price growth.
load growth generally saw retail electricity
prices decline in real terms – Ryan Wiser, Lawrence Berkeley Lab
I posted a few graphs the other day showing the breakdown of generation in several of the states with the highest rise in rates. Gas is prominent in all of them.
California is often cited as an example of a blue state with high penetration of renewables, and high electric rates. But the graph shows that California still has a very high gas footprint.
Worth mentioning that California has some additional pressure on rates due to impacts on the grid of climate extremes like storms, and especially fires. Pacific Gas and Electric lost a multi billion dollar lawsuit blaming their transmission infrastructure for starting disastrous fires.
That’s lead to an expensive effort to upgrade and underground lines, adding to cost.
Listen to Jigar Shah, formerly director of the Department of Energy’s Loan Program office under Joe Biden.
Jigar Shah on the Open Circuit Podcast:
This week, the electricity prices in California and the Western power pool are 4 cents a kilowatt-hour. Southern California Edison charges 35 cents a kilowatt-hour and has a 10% rate increase going into effect next week. That means that for the first time ever, the generation cost of their bill is less than 10% of their bill
Lets look at the other states ID’d in the graph has having had a big rise in prices.
I’ve been doing a lot of pushback on social media on the “renewables cause high prices” memes being pushed by the current administration, notably fracking executive turned Secretary of Energy Chris Wright.
Wiser’s research did show a correlation between price rises and renewable energy mandates, but these represent a small number of instances.
His presentation states:
- There is no significant correlation between higher prices and deployment of utility-scale solar & wind
- The states with the largest increase in solar & wind between 2019-2024 appear, if anything, to have experienced price decreases over the same period
There is some nuance, as some small rate hikes are associated with states that have renewable portfolio standards, but..
Wiser et al, Electricity Journal:
While approximately 75 % of utility-scale wind and solar growth in the U.S. from 2019 through 2024 was not mandated by state RPS programs, the remaining 25 % was at least notionally attributable to such policies. State RPS programs intend to deliver societal benefits by requiring renewable energy deployment at specified levels, in some cases with carve-outs for specific technologies. In some states, the required deployment levels (overall, or of particular technologies) exceed what the competitive market would supply, compelling electricity suppliers to incur higher costs than would have otherwise occurred. It is therefore expected that RPS policies will often raise retail prices, especially in states with more-costly renewable energy supplies, a relationship confirmed by prior research (Morey and Kirsch, 2013, Barbose, 2024, Tra, 2016).