High electric bills will continue

Investment Analysis Clubs Macro Economic Trends and Risks
1

https://www.nytimes.com/2022/05/03/business/energy-environme…

**Get Ready for Another Energy Price Spike: High Electric Bills**

**Rates have jumped because of a surge in natural gas prices and could keep rising rapidly for years as utilities invest in electric grids.**

**By Ivan Penn, The New York Times, May 3, 2022**

**Already frustrated and angry about high gasoline prices, many Americans are being hit by rapidly rising electricity bills, compounding inflation’s financial toll on people and businesses....**

**The immediate reason for the jump in electric rates is that the war in Ukraine has driven up the already high cost of natural gas, which is burned to produce about 40 percent of America’s electricity. And supply chain chaos has made routine grid maintenance and upgrades more expensive.**

**What is particularly worrisome, energy experts said, is that these short-term disruptions could be just the start. They fear that electricity rates will rise at a rapid clip for years because utilities and regulators are realizing they need to harden electric grids against natural disasters linked to climate change like the winter storm that left Texas without power for days last year. Power companies are also spending more on new transmission lines, batteries, wind turbines, solar farms and other gear to reduce greenhouse gas emissions....** [end quote]

Builders can install heat pumps instead of natgas home heating systems but that uses electricity. Summer is coming and global warming is increasing the need for air conditioning. Electric cars will put additional demand on the system.

https://fred.stlouisfed.org/series/MHHNGSP

https://fred.stlouisfed.org/series/CUUR0000SEHF01

Electricity and natgas prices are rising as Covid rules prohibiting service cut-offs are no longer in effect. That will hurt the poor most.

Once renewable energy sources are fully built into the grid, prices are predicted to drop. The average price of electricity in January 2022 was 14 cents per kilowatt-hour, up 8% from a year earlier. The Energy Information Administration expects average electricity rates to fall to about 10.5 cents per kilowatt-hour by 2030 and roughly 10 cents by 2050 because of a greater use of renewable energy.

Wendy

4 Likes
2

Once renewable energy sources are fully built into the grid, prices are predicted to drop. The average price of electricity in January 2022 was 14 cents per kilowatt-hour, up 8% from a year earlier. The Energy Information Administration expects average electricity rates to fall to about 10.5 cents per kilowatt-hour by 2030 and roughly 10 cents by 2050 because of a greater use of renewable energy.

Wendy

Yikes squared!

The bang for the buck of the output of ‘renewable’ sources (i.e. wind, sun) is disadvantaged a minimum of 3:1, if not 10:1 over hydro and fossil fueled. The economics/engineering simply do not pencil out.

Getting away from the false economic/engineering premise that “wind is free, sunlight is free”, so therefore, IT’S GOT TO BE A GOOD DEAL.

The economics/engineering/installation/infrastructure support have no substance. NONE.

The same ‘free’ thought pervades the ethanol scam. (Sunlight grows the corn, the sun is free. That HAS to work.)

If the energy consumed to produce a gallon of ethanol were simply put to use directly, instead of growing corn to produce ethanol, the final energy result would be ahead by 10% to 20%.

(FWIW: Here, on SoCal Edison, taking full advantage of Edison’s Time of Use and most aggressive Primary Summer AC Interrupt programs, avg kwh charge is $0.21/kwh. USED to see $0.16/kwh, ‘back when’. Lovely.)

3 Likes
3

The Energy Information Administration expects average electricity rates to fall to about 10.5 cents per kilowatt-hour by 2030 and roughly 10 cents by 2050 because of a greater use of renewable energy.

Maybe. There are a lot of costs to be amortized. A couple of months ago, The BBC interviewed Professor Sir Dieter Helm, an economist at Oxford University. It starts at 32 minutes into the program.

www.bbc.co.uk/sounds/play/m001471v
BBC: I started by asking him why he’s called the current spike in energy prices the first net zero energy crisis.

Professor Sir Dieter Helm: Well, there are two reasons at play here. The first is that transforming an economy which is overwhelmingly dependent on fossil fuels to one that going to be net zero by 2050 and indeed the power sector, the electricity sector is supposed to be completely net zero by 2035 in thirteen years is a massive task. And it’s quite naïve to believe that something on this scale could be done other than at considerable cost. We should do it, but it’s going to be expensive. And then there’s the particular issue which comes up now. Yes, gas prices have risen, but there’s a fundamental question as to why the rise in gas prices globally has hit the UK so badly and part of that is because we are extremely reliant on gas to back up the intermittent renewables, particularly the wind, and we haven’t thought through how to do the back-up bit, the security of supply bit, while we’ve been at the same time pursuing decarbonisation.

BBC: So that’s why you’re not convinced, then, that even when this spike in gas prices on the wholesale market is done with, our energy bills will be cheaper?

DH: There’s a juggernaut of cost to come, even if gas prices fall back, and there’s no certainty they will, but they might. And if you look at that juggernaut, you can already see it in your bills. £250 is going just on the legacy costs for those renewables in the past, and there’s a lot more of those subsidies and supports to come. And we’ve got to find other ways of doing this and, I’m afraid, more expensive ones.

BBC: You believe we’ve been peddled some myths about renewables paying for themselves, even maybe working out cheaper in the long run.

DH: They may well work out cheaper in the long run, but as the famous economist Maynard Keynes once said, in the long run we’re all dead.

DB2

4 Likes
4

Another entry in the media’s constant “all pricing soaring higher forever” hysteria parade.

As luck would have it, when I put in a new HVAC system a few years ago, I opted for the higher than baseline efficiency furnace and a/c. Rebates from the utility company covered the upcharge from the baseline hardware, so the choice was a no brainer.

Steve…95% baby!

5

I hope that energy conservation makes a return. One thing I do NOT miss about physical distancing is spending time in excessively heated and air conditioned buildings. The excessive use of heating and air conditioning is a de-facto dress code that conflicts with the weather outside.

In winter, most buildings are oppressively hot. Over the years, I got into the habit of wearing a T-shirt or short-sleeved shirt under my sweater, because it’s too hot to wear a sweater. (Malls are some of the worst offenders.) To top this off: I’m much skinnier than most other people and thus have much less built-in insulation. So why am I the one complaining that it’s too hot?

In summer, most buildings are so bitterly cold that I have to remember to bring a jacket so I don’t freeze.

At home, my thermostat setting is 55 to 60 degrees in deep winter. (My trick is to start off heating season with the thermostat in the mid-60s and gradually lower it.) In summer, I plug my window air conditioning unit into a heavy-duty plug-in timer, and I cool to 80 degrees. I wait until the evening to turn the air conditioning on.

1 Like
6

What is particularly worrisome, energy experts said, is that these short-term disruptions could be just the start. They fear that electricity rates will rise at a rapid clip for years because utilities and regulators are realizing they need to harden electric grids against natural disasters linked to climate change like the winter storm that left Texas without power for days last year. Power companies are also spending more on new transmission lines, batteries, wind turbines, solar farms and other gear to reduce greenhouse gas emissions… [end quote]

Builders can install heat pumps instead of natgas home heating systems but that uses electricity. Summer is coming and global warming is increasing the need for air conditioning. Electric cars will put additional demand on the system.

Wendy

===========================================================================

The spikes in electricity rates are mainly due to natgas prices. They may be high currently at $5, but by historic standards natgas prices reasonable. We have been lulled by the $2-$3 natgas prices for last 10 years. They will probably come back down to $3 in 2023.

The grid needs to be hardened for climate change and new generation is always needed for growing demand. That is why power companies are spending more on new transmission lines, batteries, wind turbines, solar farms and other gear to primarily increase electrical system reliability and in the process reduce greenhouse gas emissions.

Jaak

7

The bang for the buck of the output of ‘renewable’ sources (i.e. wind, sun) is disadvantaged a minimum of 3:1, if not 10:1 over hydro and fossil fueled. The economics/engineering simply do not pencil out.

Getting away from the false economic/engineering premise that “wind is free, sunlight is free”, so therefore, IT’S GOT TO BE A GOOD DEAL.

The economics/engineering/installation/infrastructure support have no substance. NONE.

===================================================================

Yikes is in your pants. As a power plant engineer I can tell you that wind and solar are the least expensive ways to generate electricity. Cheaper than natgas power plants.

That is proven by wind and solar are the fastest growing power generation sources in 2022 - 2023.

EIA forecast for 2022 - 2023

We forecast that the annual share of U.S. electricity generation from renewable energy sources will rise from 20% in 2021, to 22% in 2022, and to 23% in 2023, as a result of continuing increases in solar and wind generating capacity. This increase in renewable generation leads to a decline in natural gas generation, which falls from a 37% share in 2021 to 35% in both 2022 and 2023. Natural gas generation falls in the forecast even though we expect the cost of natural gas for power generation to fall from an average of $5.85/MMBtu in 2Q22 to an annual average of $4.21/MMBtu in 2023. Although new natural gas-fired power generating units are scheduled to come online in 2022, they are likely to be run at lower utilization rates than in recent years. Increasing renewable generation also contributes to our forecast that the share of generation from coal will fall from 23% in both 2021 and 2022 to 21% by 2023. A major contributor to coal’s declining generation share next year will be the retirement of coal-fired generating capacity during 2022. Nuclear generation remains relatively constant in the forecast at an average share of 20%. Although one nuclear reactor will be retired during 2022, that loss will be offset by the opening of one new 1.1 GW reactor late in 2022, which will be the first new nuclear reactor to open in the United States since 2016.

Planned additions to U.S. wind and solar capacity in 2022 and 2023 increase electricity generation from those sources in our forecast. We estimate that the U.S. electric power sector added 14 gigawatts (GW) of new wind capacity in 2021. We expect 10 GW of new wind capacity will come online in 2022 and 4 GW in 2023. Utility-scale solar capacity rose by 13 GW in 2021. Our forecast for added utility-scale solar capacity is 20 GW for 2022 and 24 GW for 2023. We expect solar additions to account for nearly half of new electric generating capacity in 2022. In addition, in 2021 small-scale solar increased by 5 GW to a total of 33 GW. We expect small-scale solar capacity (systems less than 1 megawatt) will grow by 4 GW in 2022 and by almost 6 GW in 2023.

https://www.eia.gov/outlooks/steo/#:~:text=We%20forecast%20t….

Jaak

2 Likes
8

The bang for the buck of the output of ‘renewable’ sources (i.e. wind, sun) is disadvantaged a minimum of 3:1, if not 10:1 over hydro and fossil fueled. The economics/engineering simply do not pencil out.

7 years ago this month I got solar PV. It is a bit tricky to compute how much I’ve saved since my utility has a tiered pricing structure where higher tiers have a higher price per kwh. But in any case I’m within about a year of paying back my costs. If I were to exclude the federal rebate it would take another ~2.5 years to pay back.
My panels have a 30 year guarantee to be at 80% of initial rating.
So far the degradation seems to be hidden in the variance in the weather.

Of course, I’m using the grid as my battery and I pay $10/month for this.

Mike

7 Likes
9

One thing I do NOT miss about physical distancing is spending time in excessively heated and air conditioned buildings.
…
(Malls are some of the worst offenders.)

It’s difficult to do efficient climate control in a large building, even with multiple zones. Even in our home with the first floor on slab, it’s much colder in the winter, cooler in the summer. The problem is the hvac system, not a desire to waste energy.

IP

10

At home, my thermostat setting is 55 to 60 degrees in deep winter. (My trick is to start off heating season with the thermostat in the mid-60s and gradually lower it.) In summer, I plug my window air conditioning unit into a heavy-duty plug-in timer, and I cool to 80 degrees. I wait until the evening to turn the air conditioning on.

You really can’t expect most people to like your temperature ranges. I find temperatures to be relative to what you are used to. If you have in a building at 55F all day and then head to another location where it is 70F, you are going to feel oppressively hot as you describe it. That doesn’t mean it’s hot. It is just hot relative to your normal exposure.

For me, the same temperature can feel quite different depending on time of year. In the summer when it is 90F with 90% humidity, walking into the house at 72F can feel quite cold. In the winter when its 32F, walking into the house at 72F can feel quite hot.

PSU

6 Likes
11

You really can’t expect most people to like your temperature ranges. I find temperatures to be relative to what you are used to. If you have in a building at 55F all day and then head to another location where it is 70F, you are going to feel oppressively hot as you describe it. That doesn’t mean it’s hot. It is just hot relative to your normal exposure.

More than that. If it gets down to 60 at night, then toward midday when it hits 80 that will feel quite warm. However, if it then gets up to 100, in the evening dropping to 80 will feel cool.

12

It’s difficult to do efficient climate control in a large building, even with multiple zones. Even in our home with the first floor on slab, it’s much colder in the winter, cooler in the summer. The problem is the hvac system, not a desire to waste energy.

=============================================================

When you have an older house where that the designer did not consider efficient energy climate control, then it is more difficult to back fit energy efficient features. But any older house can be made energy efficient - it just costs more.

Jaak

1 Like