Cost of Electricity in U.S. Expected to Rise Despite Less Reliance on Coal

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This post is contributed by Oransi.

​The cost of electricity in the United States continues to rise rapidly, and depending on each state’s resources and plans for future energy production, may rise faster in certain regions than others. Certain factors, such as climate and the availability of coal and other natural resources, can play a role in electricity prices. The level of snow pack and stream flow in areas that use hydro power will affect energy prices.

The average cost of electricity in the United States is 11.74 cents per KWH. Prices, however, can vary radically from region to region for the reasons discussed above, with customers in Hawaii and Vermont paying an average of 36.72 and 19.97 cents per KWH, respectively, and customers in energy rich Louisiana and Idaho paying only 8.38 and 8.47 cents per KWH, respectively. Electricity costs also vary depending on sector, with residential units paying the most on average (11.74 cents per KWH) and industrial complexes paying the least (6.53 cents per KWH). Variation in electricity costs also exists throughout the world, with customers living in the Solomon Islands paying an budget busting 85 cents per KWH and customers in Bhutan paying just 3.14 cents per KWH!

The United States if fortunate to have abundant natural resources that can be utilized to produce electricity. The location of these resources is key in determining the local energy costs for customers. The U.S. still uses coal as its primary source of electricity, which makes up 37.8% of the total sources of electrical generation. Natural gas and nuclear power are the second and third biggest sources of electrical generation, coming in at 27.7% and 19.3% of the total sources of electricity generation in the U.S., respectively. Hydroelectric conventional and “other renewables” make up 6.5% and 5.9%, respectively, with wind and “other” making up the remaining 6.8% of electricity sources.

While coal remains the largest source of electrical generation in the U.S. and renewables make up a smaller portion, the U.S. has actually seen a 22% decrease in the use of coal and a 83% decrease in petroleum liquids in electrical production. Renewable sources and natural gas, however, have seen a 177% and 78% increase, respectively, in electrical production.

Despite the shift to renewable sources, it is expected that electricity costs will increase 21% over the next ten years and 51% over the next twenty years. Everyone from politicians to industry leaders and homeowners to factory managers will need to be involved with making decisions regarding electrical production in the next couple of decades. With such a large rise in electricity costs expected, the U.S. will have to determine the best course of action for individuals as well as the economy as a whole. In addition, the depletion of natural resources such as coal and petroleum will have to be taken into consideration. Despite the huge percentage drop in coal as a source of electricity, it remains the largest source of electrical production in the United States. This trend can only continue for so long, so the renewable sector will need to make gains in order to alleviate the problem

Infographic provided by Oransi