When will electricity prices go down?
Will the energy prices ever fall? If yes, then when? and if no, then what to do in order to make its effect on you as low as possible.
These questions and more, I will be answering in this short article for you to know what you should do.
Without further ado, let’s begin!
Will Electricity Prices Go Down?
Generally speaking, electricity prices might momentarily go up and down during a certain year due to the market circumstances and changes, but in total, they will keep going up with time due to major factors like continuous increase in demand and inflation.
Unless a significant change happens in the resources used in generating electricity that causes the prices to fall significantly, it is highly unlikely to see energy prices going down as the continuous inflation with demand increase will be prevalent.
Recommended for US Homeowners:
3 Main Factors That Make Electricity Prices Go Up & Down
Supply & Demand
This is the main factor that affects continuous changes electricity prices in a free market, where the prices increase if the demand surpasses the supply, and goes down if the supply exceeds the demand.
And since the demand on electricity increases during winter, it is expected to have higher prices during the cold months, which requires consumers to find ways to lower their electric bill in winter, before they drop down as spring starts due to the decrease in demand.
But the increased demand in winter is not the only factor that causes electricity prices to go up, as they might increase even during the warm months due to the decrease in supply of the fuel that is used to generate electricity.
Big part of today’s electricity is generated in power plants that use natural gas or petroleum to power turbines that run electricity generators.
And if there’s a problem that causes the supply of the used fuel to drop, then the price of that fuel will significantly increase, just like what happened during the pandemic in 2020 & 2021, which will then increase the cost of generating electricity, making electricity prices to soar.
But generally, even if the supply is fixed, the demand on energy will keep going up with the continuous increase in population, and the available amount of available traditional fuels will go down, which will cause the average electricity prices to go up year after year.
Operation and maintenance costs of all of the components of the electrical system from the fuel storage facilities and power generation plants, to high voltage transmission lines, into distribution stations until the electricity meter at the consumer side represent a big part of the total cost of electricity that affect the price.
These components age with time and need regular maintenance until the end of their lifespan when they are replaced with new parts.
This all comes with recurring costs that increase with time as the cost of labor, maintenance material, and replacement parts keep going up, which is finally reflected on the retail price of electricity that has to go up in order to keep the electric grid running profitably and reliably.
Inflation is a major reason why the price of almost everything keeps going up, and until a magical solution comes in to stop inflation through major changes to the economic marketplaces and the financial system, it will keep causing electricity prices to go up.
As you can see, electricity prices might go up and down as time passes, but the inflation and the increased operation and maintenance costs will usually have a bigger effect than the changes in supply and demand, leading to accumulatively increase the average electricity price over time.
However, there are some possible changes that might help lower down the electricity prices, or at least, keep them steady or slow down the rate at which they increase, which we will discuss next.
When Will Electricity Prices Go Down?
Electricity prices could go down or slow down its continuous climb if one or more of the following things happen:
Existing Fuel Price Falls Significantly
In case that the supply on the traditional types of fuel used for generating electricity becomes much higher than the demand, their prices will eventually drop and that would lead to lower electricity generation costs, which might offset the effect of the increase of O&M costs and the inflation, causing electricity prices to eventually drop.
Such significant drop in fuel prices would happen in case that the exporters of these fuels started increasing their production leading to a price war between them, if new fuel producers came in to the market with capabilities in producing big amounts of fuel, or if existing electricity generation companies that use traditional fuels started switching to other types of fuel like nuclear, biogas, geothermal, …etc.
As the demand on traditional fuels goes down, the prices from competing exporters in the free market will have to fall down, leading to lowering power generation costs in plants that still use traditional fuel like oil and gas.
New Electricity Companies Get in
Assuming that nothing happened to the fuel prices, and the generation plants didn’t switch away from gas and oil, there’s still a possibility that electricity prices will go down in certain countries or states in case that more utility companies entered the market to sell electricity.
This will happen if the competing companies are willing to sacrifice part of their profits in order to acquire a bigger market share.
But the room to lower down electricity rates here is a bit low as it is constraints within the limits where the profit of these companies exists, which might make it hard to stand against the continuous rise in fuel prices, O&M costs, and inflation.
It could slow down the continuous increase in electricity prices, but not necessarily stop the increase or lower the prices.
New Technology – Renewable Energy Sources
Having more efficient electricity generation technologies even using the traditional fuel sources can help lower down electricity rates a little bit.
But new generation technologies that use renewable energy sources is the real way to cut down electricity prices significantly.
Renewable energy sources like sunlight, wind, hydraulics are free to use as no one country or corporate own them, and they are renewable, which means that you can use as much of them as you can without worrying about them getting scarce.
There are still costs associated with electricity systems that use these resources such as the cost on stalling generation plants that use these resources to create electricity, in addition to the operation and maintenance costs, but these can be easily offset by the significant drop in fuel price as you electric companies don’t need to pay for using wind, sunrays, or water movement.
The initial cost of installing generation plants that use renewable energy source might be higher than the cost of installing plants that use other fuels, but the long-term cost efficiency makes them more feasible.
Not to mention that renewable resources are more environmental-friendly, leading to better health for planet earth, people, plants, and animals.
Honestly, between the three cases above, moving towards renewable energy sources is the most realistic way to lower electricity prices.
So, depending on how serious the regulators and electricity companies in your country when it comes to relying on renewable energy sources to generate electricity, you can assess how soon or far when electricity prices are going to go down.
Conclusion – Electricity Prices Might Not Fall Any Time Soon
Although switching to renewable energy sources will make it really possible to make electricity rates to go down, but it is going to take some time for this to happen, depending on the seriousness of local governments, the interest of electricity generation companies, and the available finances to fund such big transformations.
This means that might take some time for electricity prices to finally go down, or at least, stabilize.
But don’t worry!
There’s a solution for that!
Here’s How to Protect Yourself from Electricity Prices
You can use different ways to save money on electricity with practices and devices that lower electric bill.
But if you want to almost entirely avoid being affected by the continuous electricity rates increase, and you don’t want to wait for guys in the suits to decide to take a serious step towards adopting renewable energy sources at a massive scale, then you can take that step by yourself.
You can do so by installing a renewable energy system that supplies you with your needs of electricity without having to pay for the fuel, which is free.
Solar panels provide the most reliable, predictable, and cost-efficient way to generate electricity for small consumers and save money on the long run.
You will still need to invest in installing a complete system, but the savings over the lifetime of these panels will make it worth the investment as solar panels can eliminate electric bill almost entirely.
Not to mention that installing a solar panel system can increase the value of your home, which means more money if you want to refinance or sell your home.
But What to Do if You Can’t Afford Installing Them?
There’s also a solution for that.
Many companies offer funding solar plants for consumers like homeowners and small businesses.
SunPower, the leading US solar panel manufacturer and installer can help you not only estimate how much you need to install a solar plant that provides you with free energy, but also could help you find financing solutions so that you install the complete solar panel plant without a down payment.
You can visit their website, enter the zip code of your area, finish a short survey about your place, and they will contact you to arrange for a free appointment in order to discuss the available funding solutions.
This is the most realistic, reliable, and fast solution in order to protect yourself from the continuous changes in electricity prices that will not go down any time soon.
I hope that this guide was helpful and insightful for and helped you find out if energy prices were going down or up in the coming year, and how to avoid being affected by the continuous increase in electricity price.
If you found this helpful, please, feel free to share it with others who might need to read it, and if you have any question related to this matter, please, feel free to ask me in the comments’ section below and I will do my best to help you out 🙂
Are You a US Homeowner?
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SunPower is a leading solar energy company, and they can advise you on your eligibility.
Enter your zip code, and finish the 1-minute survey, and SunPower’s professional team will contact you shortly!