Will Non-Fossil-Fuel-Produced Electricity Rates Fall?

Many studies argue that the cost of electricity for consumers will fall as the transition to non-fossil fuels gains traction, but since 2000, consumer electricity rates in the U.S. have generally increased. In fact,electricity rates in the United States have increased significantly since 1950, despite some periods of relatively low or stable rates. 

Despite that track record, advocates continue to argue that a switch to non-fossil fuels will lead to lower prices. 

Wholesale electricity prices are projected to decrease by 20 percent to 80 percent in the medium term (by 2040) in the United States, depending on the region, according to Brookings researchers. 

Other advocates argue that U.S. households could save an average of $500 a year on energy costs from non-fossil-fuel sources. And some advocates say cheaper energy is possible in the G7 countries by 2025. I doubt that can be claimed to be realistic at this point. 

In fact, there is no clear evidence that G7 country energy costs have declined since 2000, or even since 1950. In fact, the information suggests that energy costs have generally increased:

• Electricity investments within the G7 are projected to triple in the coming decade, indicating rising costs rather than declining ones 1.

• Household spending on electricity is expected to increase, although this increase is projected to be offset by declines in spending on coal, natural gas, and oil products 1.

• The share of GDP spent on energy in G7 countries is expected to decline from around 7% today to just over 4% in 2050, but this is due to economic growth rather than falling energy costs 1.

• While total household energy spending in the G7 has not declined since 2000 1.

• The data shows that coal power capacity in G7 countries peaked in 2010 and has since fallen, but this doesn't necessarily translate to lower energy costs for consumers 2.

I find that energy prices for consumers will fall as the transition to non-fossil fuels is made to be questionable. 

Even granting some short-term price increases to create new infrastructure, the theory that long-term prices will drop seems questionable. Serious people used to argue that nuclear power would create such plentiful supplies that it would be “too cheap to meter,” and that never happened. 

One might note that many of the claims about future benefits come from studies conducted or sponsored by the IEA, hardly a disinterested industry source.