Whether you are investigating the hike in electricity prices for households or offices, the trend is upward in both cases and unfortunately, every corner of the Globe is affected by it. In the last 20 years, the prices have most certainly increased, however, if we just consider the price fluctuation of the last decade, the change is exponential and this is indeed an alarming situation.
It indicates one thing only – somewhere something is terribly wrong!
Factors contributing to the growing electricity cost
Please note that the following are the most notable factors that collectively affect the prices.
Currently, the production of electricity depends entirely on fuel (e.g. natural gas) and since the fuel cost varies every quarter, particularly when the demand surges, there is no way to curb electricity costs associated with it.
Just to clue you in, if the electricity demand increases in a particular area, the demand for natural gas would also rise and as a result, the government will have to charge you more for providing the electricity using these resources.
It is an insanely difficult and expensive task to build a power plant, especially if it happens to be in a remote area. That’s not it. In fact, in the long run, the operational costs may outrun the installation cost, thus pushing the financial burden towards end consumers.
In recent years, since the labor and fuel costs have increased (a core factor for all logistical requirements), the cost for building and maintaining a power plan has also gone up.
Transmission and distribution system
These systems do not only incur high operational costs but are most exposed to natural disasters. Therefore, if anything goes terribly wrong, the repair may cost several million. Please note that you may think these expenditures are covered by the governments, but they already know the risk and hence, a certain percentage of your bill’s payment is reserved for addressing these issues, if need be.
Depending on all of the factors discussed above, the governments have to derive regulations to charge the residents and in some states/provinces, it might be disproportionately higher than others.
Type of customer
Although it varies from one country to another, usually, the residential and commercial consumers pay their bills at the highest rate because it costs the government an immense amount of resources to distribute the electricity. However, the industrial rates are far less since they can receive the electricity at higher voltage, thus releasing the government’s burden.
So, as a resident of some country, you also know how the rates have increased in the last decade and given the scenario, it doesn’t look like the prices are going to come down in the near future. This is because the resources being utilized by the government, run on the concept of ‘demand and supply gap’ and considering all of the factors mentioned above, the costs are only expected to rise.
Therefore, it is time for us to think about using modern renewable energy resources that would be cost-effective and planet-friendly as well.
Photo by Artem Beliaikin