Electricity prices are going up at about twice the rate of inflation. This is becoming a political problem for anyone currently in power, including President Donald Trump.
“Any State that has built and relied on WINDMILLS and SOLAR for power are seeing RECORD BREAKING INCREASES IN ELECTRICITY AND ENERGY COSTS,” the president posted Wednesday on Truth Social, calling these renewables “THE SCAM OF THE CENTURY!”
But … are they? Is there a clear relationship between the spread of renewable energy and electricity prices at the state level, let alone one that’s driving up prices?
In a word, no. Here is a chart of average electricity prices in all 50 states compared to how much of their electricity they get from renewables.
There is, if anything, a slight negative correlation between renewables penetration and electricity prices, but as you can see, the dots are all over the map.
In fact, in some of the states with the highest level of renewables, prices have either risen more modestly than average or even fallen, as is the case with North Dakota. The state formerly governed by wind-hostile Secretary of the Interior Doug Burgum has seen its average electricity price fall to just over $0.08 per kilowatt-hour in May of this year, from $0.09 in May, 2019; meanwhile 36% of the state’s electricity comes from wind, the sixth-highest percentage in the country, according to Energy Information Administration data.
In Iowa, the state with the most renewables usage (again, thanks to wind), the average electricity price in May was just over $0.09 per kilowatt-hour, compared to just below the same level in May 2019.
But let’s expand the aperture out a little further. Have the states with more renewables on their grids experienced faster than average growth in electricity prices?
Again, no, and if anything slightly the opposite. “Many of the states with the largest increases in wind and solar generation since 2010 — including Iowa, New Mexico, Kansas, and Oklahoma — have seen rates rise slower than inflation,” according to research from Energy Innovation. You can see the relationship in this chart.
It’s true that both California and Maine, which are outliers in terms of electricity price increases, also get more than the national average share of their electricity from renewables.
In California, most of that rise comes down to costs related to wildfires, which also drove the utility PG&E into bankruptcy in 2019. And while many Mainers have blamed the state’s solar incentives for rising bills, an examination by Canary Media found that natural gas price volatility had more of an impact. Typically, states near the edge of or isolated from larger energy networks — including California and Maine, but also Hawaii, Alaska, and certain other New England states — have the highest electricity prices, regardless of how much renewable energy they have on the grid.
But make no mistake, prices are rising all over the country. The U.S. average electricity price has gone up by around 27% in the past six years, from around 10-and-a-half cents per kilowatt-hour in May 2019 to more than $0.13 this year. The biggest surge happened in 2022, when average electricity prices jumped from $0.11 per kilowatt-hour at the end of 2021 to well over $0.13 by the following August. Electricity prices have risen 5.5% in the past year alone, according to the Bureau of Labor Statistics, while overall prices have risen 2.7%.
If you’re trying to explain why electricity prices have risen, the answer, my friends, is not blowing in the wind — or shining in the sun, or anywhere else, for that matter. The real reason involves a host of factors, as my colleague Robinson Meyer explored earlier this week. Top of the list is the physical reality of the grid itself – which, yes, includes some costs associated with the buildout of renewable energy and the transmission infrastructure required to get it to customers, but is mostly related to local distribution, i.e. bringing power to people’s homes. Beyond that, extreme weather, natural gas prices, and data center-induced demand growth all play a part.
Whatever the reason for the rise in prices, though, it’s not good for Trump, who promised during the campaign that electricity prices would go down by half during his first year in office. Halfway through, things do not look promising, with more price hikes likely on the horizon.
Secretary of Energy Chris Wright acknowledged the present-tense price increase earlier this week when asked about rising prices. “And who’s going to get blamed for it? We’re going to get blamed because we’re in office,” Wright told Politico.
Wright’s comments have put some pep in the step of a beleaguered renewables industry. “When government officials start PR campaigns claiming something is not their fault … It’s their fault. Obstructing the fastest growing source of American power during a period of high demand is going to hurt consumers,” Jason Grumet, the head of renewables trade group ACP, wrote on X Wednesday.
Despite it all, renewables and storage make up the vast majority of planned new generation in the U.S. More than half of the 64 gigawatts of capacity planned to be added to the grid this year will come from solar, according to recent EIA data, with 18 gigawatts coming from battery storage and 8 gigawatts from wind. If recent history is any guide, any electricity price hikes we see going forward won’t be the fault of that new generation.
With data assistance from Charlie Clynes.
