Rising costs for power distribution and transmission, along with fluctuating gas prices, are driving up electricity prices for consumers in the United States, even as competitively priced renewables deliver the lion’s share of new capacity added to the grid.
The U.S. added 56 gigawatts of new power capacity in 2024, including 60% from solar, 23% from battery storage,10% from wind, and 2% from nuclear, reports Canary Media. That made up 96% of new generation in the country, while about 4% of new capacity was from gas. The final numbers align almost perfectly with projections from the start of the year, except that the country saw less wind capacity added than predicted.
Renewables are providing electricity at increasingly competitive prices, and are now among the cheapest forms of electricity available. But fossil fuels are still the leading energy source in the country, and rising power demand has kept some facilities operating past retirement to meet the needs of consumers.
With this mix of power sources, retail electricity prices for utilities have remained roughly flat from 2019 to 2023—after accounting for inflation—but prices have gone up for consumers, a new study from Berkeley Lab shows. The main driver for this difference comes from costs passed on from utilities for distribution and transmission, writes Canary Media. In California, for instance, these costs are linked to addressing wildfire risks and impacts, while in other places ratepayers are paying to repair aging power grids or for expanded systems. The national reliance on fossil fuels has also contributed to rising costs as utility fuel and purchased power (FPP) costs fluctuate with gas prices.
Overall, increasing load growth did not contribute to price increases, the study shows. More than half of U.S. states saw declining load in that time, and those with the greatest declines also had the highest increase in retail prices. Loads increased in seven states, with many utilities attributing the rise to data centres and advanced manufacturing.
“Data centres in Oregon, Florida, North Dakota, Virginia, and Texas led directly to the high growth rates observed for several of the utilities,” writes Berkeley Lab.
The impact on load growth of behind-the-meter (BTM) resources like heat pumps, EVs, and rooftop solar installations was beyond the scope of the research, though the data do indicate that customer investments in these resources grew. Impacts from EVs grew the most—at more than 400% from 2021 to 2023—while heat pump sales increased 16%. While the increase in EVs boosted electricity consumption, the impact of heat pumps depended on whether they displaced fossil fuels.
BTM solar generation also grew by roughly 40,000 gigawatt-hours from 2019-2023, with retail solar accounting for 70% of the total. According to Berkeley Lab, BTM solar generation typically represents a “one-for-one displacement of retail electricity sales (i.e., reduction in load),” depending on the net metering structure.
