Renewable Energy Is Getting Cheaper. Why Aren't Power Bills?

Solar panels and wind turbines make electricity at a low cost. The problem is, there aren't enough of them.

A worker holds a tablet while around a wind farm.

Wind energy is one of the cheapest ways to generate electricity today. But fossil fuels still power the bulk of the US power grid.

Daniel Balakov/Getty Images

More than 40 years ago, President Jimmy Carter installed solar panels on the roof of the White House. In his speech revealing the panels, Carter warned that this technology could become "a curiosity, a museum piece, an example of the road not taken" or, he said optimistically, a defining moment for the country, "harnessing the power of the sun to enrich our lives as we move away from our crippling dependence on foreign oil." 

With the dramatic growth of solar energy in recent years, the technology has certainly become much more than a curiosity. It's starting to live up to its promise of clean, cheap, abundant power.

"When Carter put solar panels up on the White House, it was a moment, but solar panels were super expensive. It was a symbol of what that represented. It wasn't an economic decision," said Arvin Ganesan, CEO of Fourth Power, a maker of energy storage. "What's happened since then is that the cost of renewable energy is now the cheapest way to generate new electrons on the grid." 

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While renewable energy is now a cheaper way to generate electricity than climate-warming fossil fuels, your power bill may still be going up. So what gives, and when will the tide turn?

Electricity costs continue to trend up

It's pretty cheap to turn solar energy into electricity. But it doesn't feel like energy is cheap when the electric bill arrives.

Average electricity rates increased by nearly 3% between February 2023 and February 2024, according to the US Bureau of Labor Statistics. That increase wasn't universal, depending on the state, thanks to wildly different policies and economic factors. For instance, North Carolina saw the largest increase, at 17%, during that period, while costs in New Hampshire dropped by 17.7%. 

Those costs matter. The National Energy Assistance Directors Association and Center for Energy Poverty and Climate expect home cooling costs to rise by 7.9% compared to last year, thanks in large part to rising temperatures

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At the same time, we're harvesting more clean electricity than ever before. In 2023, the US generated 238 terawatt-hours of electricity from solar in 2023, eight times the amount generated a decade earlier. 

The problem: We still don't have enough of that cheap renewable energy. About 60% of electricity in the US still comes from fossil fuels -- including 43% from natural gas -- according to the US Energy Information Administration

That means the majority of the grid is susceptible to swings in oil prices, which can be influenced by wars across the globe, weather events and other chaos.  

Meanwhile, the portion of our electricity that comes from renewables is getting cheaper all the time. In 2022, a report from the International Renewable Energy Agency found that the cost of electricity from wind and solar sources fell by 13% or more across the globe. 

"Renewables are by far the cheapest form of power today," Francesco La Camera, director-general of IRENA, said in the report. "2022 is a stark example of just how economically viable new renewable power generation has become. Renewable power frees economies from volatile fossil fuel prices and imports, curbs energy costs and enhances market resilience -- even more so if today's energy crunch continues."

Ganesan, whose company develops thermal battery technology, credits technological development for getting us to this point. 

"The efficiency of solar panels is just significantly better at this point," he said. "The output of a solar panel is now highly efficient. And what caused that is a lot of projects the government catalyzed over that intervening 20 years to bring down the cost of renewables. So it was government R&D, government intervention that launched this revolution to bring low-cost, high-efficient solar panels to the market. And the same is true for wind."

Who should pay for the energy transition?

Despite the shift toward cheaper, cleaner, renewable sources of energy, consumers still don't give the energy system high marks. A recent report from the global accounting and consulting firm Ernst & Young detailed declining confidence in the energy system and a feeling among consumers that the onus is on them, as individuals, to change. Instead, Americans feel the burden of the energy transition should fall more heavily on the energy industry.

The survey of 3,000 US consumers found that just 30% of Americans "feel confident their energy will remain affordable," and saw "consumer confidence toward the US energy system" plunge to 56.9%, down from 65.8% in 2022. It also found that most Americans (68%) believe "they are doing everything they can to be sustainable" and that energy providers (65%), local governments (42%) and oil and gas companies (38%) should be taking the lead in shifting to cleaner energy. 

EY Global Energy & Resources Customer Experience Transformation Leader Greg Guthridge, the lead author of the report, said the findings didn't shock him. "There's this big gap, and that's exactly what we expected to see," he said. "The early adopters moved, and now we need to find a way to activate those who either can't or won't move, at the moment, through the energy transition." 

Even those who are ready to make the move to cleaner energies don't always have the ability to do so, which makes it all the more challenging for consumers to drive the market, said Chris Ventura, executive director of the Midwest branch of the Consumer Energy Alliance. While programs like community solar and Solar for All aim to expand access to solar power beyond rooftop solar systems, for example, they aren't available for everyone.

"For the vast majority of people out there, it's going to take some time," Ventura said. "Unlike an iPhone, where it doesn't matter where you live, if you love renewable energy and you want to put a solar panel on your roof, you can do that if you own your home. But if you're a renter or living in a multi-family housing unit or a condo, you don't have those opportunities." 

Like the consumers surveyed by Ernst & Young, Ganesan said there should be less asked of individuals and more emphasis placed on systemic change to solve "systemic issues." 

"I absolutely resonate with the idea that people feel overburdened in general and don't want this to fall on their shoulders," he said. "One out of five people can't afford to pay their electricity bill in the United States, so to have the solution fall exclusively on their shoulders is not fair, especially when governments and utilities are much better poised to deliver the solutions." 

When will renewables bring down energy prices?

In an industry that's catching up to technology, demand and infrastructure, when will consumers see a difference in their energy costs? Experts hope we're not far away, and momentum is on their side. 

"Simply stated, if the (capital expenditures) of building new renewables plus storage is cheaper than … building a new natural gas plant, plus the cost of fuel, then every single time you're going to build clean energy," Ganesan said. "That reduction in cost will eventually kind of ladder up into cost savings for consumers. And we're about at that inflection point now." 

One of the factors affecting clean energy is upfront cost. From solar panel installation to electric vehicles, the promise of return on investment can be a tough sell. But as that upfront cost decreases with better technology, the pitch becomes an easier one. 

Investing in renewable energy "sounds too good to be true," said Albert Gore, executive director of the Zero Emission Transportation Association (and son of former vice president Al Gore). "And also, it does require the ability to invest, in the case of a solar system, $30,000 knowing that you'll break even in maybe eight years, depending on where you live. But public sentiment has improved dramatically." 

And for all of these electricity uses, one thing is certain: Stability is a good thing. And whether you're plugging in your electric vehicle or powering your home, it's easier to rely on wind and the sun than harvesting fossil fuels and shipping them across the globe. 

"Renewables, in conjunction with other technology … have the potential to help make the grid stable in the long-term, and thus drive down costs," said Ben Prochazka, executive director of nonpartisan, nonprofit organization The Electrification Coalition. "That's where cost comes from: unstable energy and unstable demands." 

Article updated on June 8, 2024 at 1:45 PM PDT

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Andrew King Contributor
Andrew King is an award-winning journalist and copywriter from Columbus, Ohio. He has covered sports, local news, entertainment and more for The Athletic, The Columbus Dispatch, Major League Soccer, Columbus Monthly and other outlets, and writes about home energy for CNET. He's a graduate of Capital University, and recently published a non-fiction book called "Friday Night Lies: The Bishop Sycamore Story" investigating the fraudulent high school football team that became the talk of the nation.
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