The Electric Power Monthly report by the US EIA on electricity power found that the electricity prices went up by 4.3% to 13.72 cents per kilowatthour (kWh) in 2021. This is the highest annual rise since 2008. The report also mentioned that the rise is expected to continue and is forecasted to rise by 3.9% in 2022.
With the electricity prices rising, energy efficiency measures and renewable energy projects will become more valuable. The spike in electricity prices means the cost that can avoided by efficient energy consumption also increases.
Let’s dive a little deeper now.
US States with the Most Expensive Electricity
For the residential sector as of December 2021, 7 states: Massachusetts, Rhode Island, California, Connecticut, New Hampshire, Alaska, and Hawaii, had the average kWh prices of above 20 cents/kWh. For the commercial sector, only Hawaii had electricity price on the higher side by the end of 2021.
Hawaii had the highest electricity prices of 35.57 cents/kWh in the residential sector, and 34.45 cents/kWh in the commercial sector. Typically, islands have highest electricity prices. This is due to the cost that comes with fuel imports.
Considering the mainland state, Rhode Island has the highest residential electricity price of 25.11 cents/kWh, and California has the highest commercial price of 18.44 cents/kWh.
On comparing the US regions, New England had the highest kWh prices of 22.04 cents/kWh for residential consumers, and 17.03 cents/kWh for commercial consumers. The 6 regions included are Massachusetts, Connecticut, Maine, New Hampshire, Rhode Island and Vermont. Out of the 6 states, Maine and Vermont had electricity prices below 20 cents/kWh for residential.
There are several factors affecting the rise in electricity prices in the US.
- For power plants, the price of natural gas went from $2.32 to $4.98 per million BTU in 2021. This is over 110% increase.
- The February winter storm disrupted supplied for Texas, which resulted in spike in gas prices.
- The ongoing Ukraine and Russia conflict will likely result in the gas prices rising even higher in 2022.
More Demand for Energy Efficiency and Renewables
Energy efficiency measures and renewable energy generation are both excellent options for reducing the energy bills. Energy efficiency cuts down the consumption directly, while renewable generation takes care of a part of your overall consumption or replaces it completely. Both measures give the same results; less kWh per month. With a rise in electricity prices, the energy bills will increase and the costs avoided from energy efficiency measures and renewable sources also increase.
When it comes to renewable energy, solar panels are the most common option for residential and commercial businesses. Wind turbines, hydro turbines and biomass are also used by building. However, they are more demanding than solar panels when it comes to site conditions.
For energy efficiency measure, there are many options that can be explored which will effectively reduce the energy bills. LED lighting upgrades and automatic controls generally achieve the quickest payback periods with high savings when compared to their upfront costs. Energy retrofits can offer long term savings, but that comes with high upfront cost. The best course of action is to consult to an energy expert for identifying which measure will lead to the highest ROI. With the right strategy, the energy bills can be cut down by 50% or more.
Depending on the type of the project, there may be incentives that can cover a significant part of the cost associated. For the expenses that are not covered by the incentives can be distributed over a tenure with C-PACE loans or low interest loans.
Michael Tobias, PE, is the principal and founder of NY Engineers. He leads a team of over 50 MEP/FP engineers. Although New York Engineers main headquarters are in NYC and Chicago the business has led over 1,000 engineering projects in New York, New Jersey, Connecticut, Pennsylvania, Florida, Maryland, and California, as well as Malaysia and Singapore. Michael is an advocate for green technology and energy efficiency, and approaches engineering as a vehicle to raise the quality of life.