I understand there is installation, maintenance and servicing costs, but shouldn’t the free power from the sun, wind and tidal eventually pay this off and start providing free power?
In: Engineering
Let’s look at it a different way:
You drive 20,000 miles a year.
You have a 20-year-old vehicle (value $10k) that is paid off, so the only expenses from it are fuel, maintenance, licenses, property tax, and insurance. It gets 15mpg, and it is missing a lot of new features. Fuel for 20k miles is 1,333.34 gallons.
So you buy a new vehicle for $30k. It gets 30mpg, so fuel for 20k miles is 666.67 gallons. You cut your fuel bill in half, but now owe $30k @ 4% and are paying $500/month on it, more in insurance & property tax, less on maintenance.
How long is it going to take to break even?
Strictly speaking, fossil fuels are also free energy. You just gotta dig them up, refine and transport them. Well renewables are “free” in the same way. I hope that makes sense.
Now on to the ELI20 part…
There are a few different ways utilities are operated, but the most common is a decoupled model. There’s 2 parts to your electric bill, the energy cost and the delivery cost. The energy cost goes to the generating station operators to cover investments, maintenance, and fuel costs. Generation operators compete with each other and are incentivised to reduce costs.
Delivery is a regulated monopoly and owned by a single company. This company’s rates are set by the regulatory agency, which is usually the state legislature or administrative agency like a commerce commission. This incentivises the regulated utility to operate very efficiently to maximize *their* profit. It also gives the state direct control over how the utility will spend on investments.
Generation costs are generally going down and up at the same time, but at different parts of the day. Renewables are very cheap to harvest when available, but making up the difference when they’re unavailable with fossil fueled peaker plants is very expensive. Nuclear plants are both very expensive to operate and slow to react to changes in demand, so they are being undercut on both sides.
Edit: Eventually the peaker plants will start phasing out as grid storage comes online to fill that role. Grid storage is usually considered generation, so it has to be profitable for companies to do it. It will become more and more profitable as fossil fuel prices increase, so more and more storage will be deployed over time. /Edit
The delivery costs are generally going up across the country as states direct their utilities to invest in reliability and capacity improvements for electrification of cars and homes.
All in all, costs are rising but this should be transitory as the investments are made and electrification unfolds.
Source: I’m a distribution engineer working on grid improvements in my state.
Energy systems are complex and each part of the system require ongoing maintenance and upgrades. You not only need to worry about existing needs, you need to be able to look ahead and plan future requirements so you don’t leave anyone in the dark. Privately owned utilities care more about profit and are a lot more expensive than public owned utilities.
Eventually, but the vast majority of electricity in the US is still dependent on natural gas fired plants.
Renewables are not necessarily cheaper. They’re also intermittent sources so need to be backed up with gas, coal, nuclear, etc.
Depending on your location, the power company can be a for-profit industry. People on municipal power may not feel the rise in prices as rapidly since there isn’t the requirement they turn profits.
The other note is that populations keep rising, so you end up needing to serve more people and more electrical items.
Your bill goes part way to cover the cost of the infrastructure. Ie pylons from the power stations to your house via substations. These need constant maintenance and repairs, plus these are expanding as more demand will be placed in urban areas as more EVs are bought and put on charge.
who said renewable and green energy are cheaper?
TL;DR: there’s a lot in your electric bill besides fuel costs. Why your bill is going up depends on the specific circumstances where you are.
Lotta people making stuff up here. The answer really depends on where you are. Some examples is the U.S:
In California, energy is getting cheaper, but the part of your bill that goes to maintaining the local wires is going up.
In Texas, they’ve got a market that by design produces very high prices when power is short, and that ran up tens of billions of dollars during the big storm a few years ago.
In the Eastern U.S, some utilities have found a loophole where they can built or replace transmission lines without much oversight and pass costs plus a healthy profit on to ratepayers. There’s been a lot of that going on.
There is no such thing as free anything. The sun, wind and water don’t turn themselves into electric power. There are costs associated with each. Not to mention cost of distribution and, as mentioned previously, growing demand.
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