A✌️370-word✌️2.5-minute✌️read
Yesterday we summarized EPRI’s analysis of 2024 energy costs. Today we look at the future.
I chose to only look at the 2035 high price scenario and ignore the data beyond 2035. Looking outside of 10 years is meaningless. Heck, for energy prices, looking out three years is a crap shoot.
For example: the multitude of unpredictable variables makes estimating specific future prices for electricity impossible.
What we do know is that due to the effort to electrify everything and the advent of AI, demand is increasing. Future prices will depend on whether supply is able to keep pace. Whether it will is a topic being heavily debated.
Conversely, the adoption of renewables is supposed to reduce production costs. However, because of needed grid upgrades to accommodate distributed energy resources, we haven’t seen that reflected in lower prices as yet. When will upgrade costs decline below the production cost savings is anyone’s guess. I’m guessing not in the next 10 years.
To put it kindly, I found EPRI’s forecast off the mark. Here’s its estimate of overall energy costs by fuel in 2035:
𝗔𝘃𝗲𝗿𝗮𝗴𝗲 𝗛𝗼𝘂𝘀𝗲𝗵𝗼𝗹𝗱 𝗖𝗼𝘀𝘁 𝗼𝗳 𝗘𝗻𝗲𝗿𝗴𝘆 𝗶𝗻 𝘁𝗵𝗲 𝗨𝗦
𝟮𝟬𝟯𝟱 𝗖𝗵𝗮𝗻𝗴𝗲 𝗳𝗿𝗼𝗺 𝟮𝟬𝟮𝟰
Gasoline $2419 -21.8%
Electricity $1,907 2.9%
Natural Gas $543 16%
Other $114 -65.3%
Solar $262 385%
Total $5,245 -9.5%
I get that that they believe EV adoption will lower gas expenditures. I also get that with the continued growth in solar, solar expenditures will increase. Beyond that, the numbers don’t add up.
Here’s what I’m confident in saying:
By 2035, electricity costs will rise well beyond 2024 levels. The average cost increase for electricity is 2 - 3% on an annual basis. To think expenditures on electricity will only rise about 3% in 10 years is, well, crazy.
I also doubt that EV adoption will accelerate sufficiently to reduce gasoline expenditures by 22%.
Lastly, I would bet my house that our overall energy wallet will not be 10% lower in 10 years. That’s a “glass is totally full” view of what the migration to renewable energy and EVs will achieve.
Looking into the crystal ball of costs is an amusing exercise, but I wouldn’t put any credence in the specific numbers.
#electrictyrates #electricty #gasoline #energycosts