Data from the Energy Information Administration (EIA) show that wholesale electricity prices were lower and more stable in 2024 than in 2023. EIA said pricing was significantly more stable than the last several years.
EIA attributed the lower prices and diminished volatility to a decline in natural gas prices and to increases in low-cost renewable energy resources and battery energy storage capacity. Natural gas prices from Louisiana’s Henry Hub, a benchmark for the market, averaged $2.21 per million British thermal units, the lowest average annual price in inflation-adjusted dollars ever reported.
“Price changes for natural gas have an outsized influence on wholesale electricity prices because natural gas prices tend to set the marginal price of electricity during most hours in most regional markets,” EIA said. “The wholesale price of electricity on the electric power grid reflects the real-time cost for supplying electricity, which can be driven by fluctuations in demand.”
Despite lower and more stable wholesale electricity prices, the retail price, the rate paid by renters, homeowners and businesses, continues to increase.
Retail electricity prices increased at an average moderate rate of 2.5% per year from 2014 to 2023. However, in recent years, price increases have ramped up. Average U.S. electricity rates rose 4.8% per year from 2019 to 2023. Looking at EIA’s most recent pricing data, average retail residential electricity rates were $0.165 per kWh in October 2023, increasing moderately to $0.169 per kWh in October 2024, or an increase of about 3%.
(Read: “U.S. electricity rates rise about 5% annually – outpacing inflation“)
EIA noted that electricity generation increased in 2024, adding 3%, or 121 billion kWh. Natural gas grew by 4%, adding 70 billion kWh, while solar generation increased 37%, adding 55.5 billion kWh. Wind generation added another 31.9 billion kWh in generation, while coal plant retirements led to 19.5 billion kWh less.
EIA reported that about 25 GW of solar was added through November 2024, up considerably from the 18.4 GW total in 2023, which itself was a record for utility-scale solar installations. In addition to the record level of solar installations, EIA said solar irradiance was higher than the 20-year average in 2024, leading to increased generation.
As seen in the chart below, solar added significant capacity in most markets, except in New England and New York, where natural gas was the leading resource added. The Texas/ERCOT region, the Mid-Atlantic/PJM region, and the Midwest/MISO region added the most solar capacity in 2024.
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