At the beginning of 2020, energy consumers were faced with plummeting fuel prices that had been brought on by a number of long-standing factors, but which were exacerbated by an impending oil price war between Russia and Saudi Arabia. This ultimately translated into falling gasoline prices, but electricity prices remained high and showed no signs of falling. This was an ongoing challenge for millions of low-income Americans, and placed a needless drag on economic growth.
Since the end of 2017, natural gas prices have fallen nearly 50%, yet the average American family paid 4% more per kilowatt hour of electricity in November 2019 than in 2017, according to the U.S. Energy Information Administration (EIA). Based on data from the U.S. Department of Energy, low income families spend 8.6% of their total income on energy, which is three times more than their non-low-income counterparts.
“In addition to fuel, consumers pay to maintain and improve the electric grid,” says Paul Steidler of RealClearEnergy.org. “And politicians like to insert hidden taxes for renewable energy subsidies and general revenue purposes into electricity bills. Deciphering one’s energy bill often requires being determined to plow through opaque jargon and bureaucratic-filled language.”
And Then There Was the Coronavirus
Then, the COVID-19 pandemic hit, throwing energy markets into turmoil along with every other market on the planet. Not only have consumers and businesses struggled to keep up with energy bills as a result of layoffs and shutdowns, respectively, but energy generators across all sectors found themselves scrambling to stay afloat and to secure their share of government protections and subsidies created to keep them operational, if not solvent.
Had consumer electricity bills seen a similar decline to oil and gas prices, obviously this wouldn’t remain a pressing issue. Between the internal intricacies of energy companies and the economic hardship they’re facing themselves, these remain in the same neighborhood, presenting ongoing challenges to electricity customers.
And to add insult to injury, the spike in COVID-19 cases and related issues speak to another economic downturn. Even if this isn’t as pronounced as the one initially spurred by the pandemic, it’s one that customers can ill-afford.
Major Disruptions… and Simple Economics
As reported in Forbes, “Most energy observers recognize that the cost of renewable energy has declined dramatically in the last decade… [Over that time], the levelized cost per unit of electricity from new utility-scale onshore wind and photovoltaic (PV) solar power plants has dropped about 70 and 90 percent, respectively. In many places, the cost of new renewable generation is at or below that of existing conventional sources like natural gas, coal and nuclear.”
Those lower prices for onshore wind and photovoltaics reflect improvements in technology over the years; the relative stability of the solar and wind sectors has also had a dramatic effect on the outlook big-money lenders have regarding those projects. Over the last several years, these have become increasingly skittish as regards investment in fossil fuels and more amenable to projects involving renewables.
According to Jon King of WHMI in Howell, Michigan, “Some say the novel coronavirus pandemic is a rallying cry for integrating more renewable-energy sources such as solar and wind into the state’s electric grid. The fossil-fuel industry is feeling the pinch from an overall drop in demand for energy in the U.S. since the onset of the COVID-19 crisis. Nathan Murphy, state director of Environment Michigan, recently said that could speed up efforts to invest more in renewables.”
Citing the fact that renewables are increasingly the cheapest option moving forward, elected officials in many states have stepped up their discourse in the area of engaging renewable energy sources in a far more widespread manner in their efforts to support energy sectors while heeding their constituents’ calls for lower electricity bills.