Electricity prices have been rising faster than inflation, with significant rate increases in every U.S. state over the past decade.
One expert has predicted this trend will only continue in the future, highlighting the growing need for affordable, renewable energy from all available sources.
What’s happening?
EnergySage shared that residential electricity rates have skyrocketed by 32% over the past 10 years. Electricity rate price hikes are the highest in California. However, no place across the nation has been immune to paying more for monthly utility bills.
EnergySage attributed the rising costs of electricity to increased demand, at least in part due to energy-intensive AI data centers and high delivery charges.
“We have an aging infrastructure, so even if we just maintain the status quo, that will lead to higher rates as we renew that infrastructure,” said MIT Sloan School of Management professor Christopher Knittel.
EnergySage offers objective, independent expertise on residential solar installations. It provides free tools to help homeowners get quick solar installation estimates, compare local installer quotes, and access federal tax credits.
However, those incentives won’t be available for much longer after the introduction of the One Big Beautiful Bill Act. Solar installations will now need to be completed by Dec. 31, 2025, to be eligible to save as much as 30% off the installation cost.
“We would expect those federally subsidized renewables to push down prices,” Knittel also shared. “Phasing out the investment tax credit and the production tax credit will only raise prices.”
Why are rising electricity rates significant?
High electricity rates strain homeowners’ budgets and put people in compromising financial situations. When people must pay more to power their homes each year, they have less to spend on supporting their families, living comfortably, and making wise investments.
Unfortunately, industry analysts don’t expect electricity rates to drop anytime soon. In fact, they anticipate prices to continue escalating faster than the rate of inflation through at least 2026.
The power grid is inadequate to support the increasing electricity demand. Yet, companies continue building more AI data centers, and extreme weather patterns continue challenging the already-overstrained grid.
What’s being done to make electricity affordable?
Research suggests that renewable energy is becoming more affordable because clean sources like wind and solar are becoming more cost-effective to produce. Solar energy has been gaining impressive traction in the U.S. and globally, offering hope to offset the impacts of rising prices.
Meanwhile, free services like EnergySage’s solar quote comparison tool help homeowners save an average of $10,000 on solar installation costs. You can get a sense of how much solar will cost where you live by using EnergySage’s mapping tool.
You can also majorly decrease your energy bills by upgrading your HVAC to an efficient heat pump. EnergySage also offers a heat pump quote comparison tool so that you can find the right system for your home and not overpay.
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