After years of steady electricity prices, Americans have noticed a one-third increase in rates over the past four years. Some members of the fossil fuel lobby and certain Republican politicians are using this opportunity to wrongly blame clean energy sources.
At a rally in Wisconsin in August 2024, former President Donald Trump claimed, “We are going to get the energy prices down. You know, this was caused by their horrible energy – wind.” However, wind energy is actually the most cost-effective source of new power in the United States today.
While wind and solar energy may be intermittent due to weather and time of day, their fuel is free, unlike fossil fuels. This makes them more stable in terms of pricing. In fact, a lot of evidence, including real-world electricity rates and power generation mixes, shows that wind and solar energy generally lead to lower electricity prices compared to fossil fuels.
According to the Lazard financial services company’s annual levelized cost of energy report, wind energy has been the cheapest source of new electricity in the U.S. for about ten years. This analysis takes into account various factors such as capital, operations and maintenance, fuel costs, financing, and utilization rates over the lifetime of the source.
States like Iowa, the Dakotas, Kansas, Oklahoma, and New Mexico, which have high percentages of wind and solar generation, boast some of the lowest electricity prices in the country. Renewable energy has been estimated to reduce electricity rates by about 13% in Texas from 2018 to 2022.
The recent rise in electricity rates in the U.S. can mainly be attributed to inflation caused by the COVID-19 pandemic. The Energy Innovation report clarifies that clean energy is not the cause of these power price increases. Instead, inflation has driven up the cost of almost everything over the past few years. The rate of electricity rate increases since 2010 has matched the rate of inflation.
In states with more fossil-fueled power generation, electricity rates have seen greater increases. Many utilities continue to invest in aging coal power plants, and states heavily reliant on natural gas have faced significant rate increases as gas prices surged.
California, with the highest electricity rates in the continental U.S., has experienced rapid rate increases due to wildfire risk. The state’s electrical utilities have had to fund wildfire risk insurance pools, prevention measures, and improved power grid resilience following devastating wildfires.
Climate change has doubled the area burned by California wildfires over the past three decades, making it crucial to deploy climate solutions like solar and wind power to mitigate these risks. Ultimately, wind and solar energy are not the causes of rising electricity prices, but rather solutions to offset other contributing factors such as fossil fuel price volatility, wildfire costs, and infrastructure spending.