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Electrical Costs Ongoing

The cost of electricity has many parts. In the United States, deregulation has broken those costs into so many disingenuous parts so that the causes of excess cost are not easily discernable. However, two aspects are clear. First, hydropower has the lowest cost if it can be maintained through environmental law suits. Second, solar and wind energy are the most expensive forms of energy, always requiring one or more forms of state subsidy. A look at the variation of price across the United States compared to countries where renewables have been emphasized is useful because prices directly reflect costs.

The basic unit of electricity for sale is the kilowatt hour (kWh), the unit of energy for which a home owner may be billed. In the United States, this can run from a low of 10 cents per kWh in Washington due to lots of hydropower, to a high of 20 cents per kWh in Connecticut. Hawaii and Alaska are the outstanding exceptions due to their isolation, rating at 30 and 22 cents per kWh respectively.

Countries with active government spending and legal support for wind and solar renewables are also shown: Germany, Denmark, and Australia. Australia is indeed peculiar in that they have actively forced the shutdown of coal and gas plants in some states. By contrast, Switzerland has ample hydropower.

The actual price any particular customer will pay also varies significantly. First commercial and industrial customers pay much less than residential. The total price usually seen in literature is lower because of this difference. Also, deregulation may yield a spot price somewhat lower than shown, but is not usually sustained over all customers.

The total cost of electrical energy is not only dependent on the source, but also the capacity needed to sustain the load. Every form of electrical energy requires the purchase of idle capacity to meet peak load. For instance, in 2010 in Connecticut, the cost of idle capacity was approximately 13% of total cost. Solar and wind energy will increase the requirement drastically because they are not always available. In Germany, this need is met with an increased number of coal plants after their decision to shut down nuclear power plants. In Australia, especially in the state of South Australia, high demand is met with blackouts. This need has led to various proposed storage solutions from large banks of batteries to pumped up manmade lakes, but coal or gas plants continue to predominate the need for idle capacity.

Another curiosity of energy production is the inability of the power company to utilize all of the generated power. Some sources of power, like solar, may be available in abundance at times when demand is low. Other sources, like nuclear or off shore wind, may not want to shut down temporarily. In some places, such a mistimed abundance has led to short term negative wholesale prices for power. This is exacerbated by local power sources (homes and businesses) who usually must be paid even if the power is not used. Without the ability to store this excess energy, costs must be passed on to the customer.

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