Energy Price Inflation Outpacing Overall Inflation

The cost of living is constantly rising, but one area where inflation has hit especially hard is energy: energy prices. Utility rates have been climbing at a rate far outpacing general consumer price inflation, putting pressure on households and businesses alike. With utility prices showing no signs of slowing down, more and more people are looking for ways to protect themselves from the increasing costs. Installing solar panels offers a powerful solution to painful energy bills and inflation — one that not only shields you from unpredictable rate hikes but also saves you money in the long term.

Let’s break down why utility rates are rising so fast compared to overall inflation and why now is the perfect time to consider installing solar panels to fight back against utility rate inflation.

In this article:

• Understanding Inflation: Utility Rates vs. Consumer Prices
• Utility Rate Inflation Outpacing Consumer Price Inflation
• Solar Panels Save You Money, Fight Inflation
• More Financial Benefits of Going Solar
• Why Now Is the Time to Act

Understanding Inflation: Utility Rates vs. Consumer Prices

Before diving into the disparity between utility rates and general consumer prices, it’s important to understand how inflation works. Inflation refers to the general increase in the prices of goods and services over time, reducing the purchasing power of your money. For everyday goods, this increase is tracked by the Consumer Price Index (CPI), which measures the average change in prices paid by consumers for a market basket of goods and services.

Utility rate inflation, on the other hand, is the increase in costs associated with your energy consumption. Unlike general consumer prices, utility rates are influenced by a variety of external factors like fuel costs, infrastructure expenses, and regulatory shifts. Because of these factors, utility prices can — and often do — rise much faster than the prices of other goods and services.

The Disparity: Utility Rate Inflation Outpacing Consumer Price Inflation

In recent years, the gap between consumer price inflation and utility rate inflation has widened dramatically. While the CPI in the United States has generally hovered around 2-3% annually in recent decades, utility rate inflation has often spiked much higher. For example, according to statistics by the US Energy Information Administration, the last 10 years have seen electricity prices in some regions increased by more than 27%, and in some cases, by nearly 78%. In 2023 alone, Oregon saw electricity rates surge by 13%, far outstripping the 4% overall CPI inflation.

^{Click to enlarge image. Data provided by US Bureau of Labor Statistics (BLS) and US Energy Information Administration (EIA).}

Why is this happening?

• Global Fuel Market Volatility: The prices of natural gas, oil, and coal—which still power much of the grid—are subject to extreme volatility in the global markets. When these prices spike, utility companies pass the cost on to consumers.
  
• Aging Infrastructure: Utility companies need to maintain and upgrade aging infrastructure. As these costs grow, utility companies often raise rates to cover the expenses.
  
• Climate-Related Disruptions: Natural disasters, extreme weather, and other climate-related events have caused billions in damage to energy infrastructure. Repairing this damage often results in rate increases.
  
• Transition to Renewable Energy: The gradual shift to cleaner energy sources, while necessary, comes with its own costs. Investments in new renewable energy infrastructure often lead to short-term utility rate hikes, even though renewable energy will eventually help stabilize prices.

Solar Panels Save You Money, Fight Inflation

While utility rate inflation continues to outpace consumer price inflation, you have the power to take control of your energy costs. One of the most effective ways to protect yourself from rising utility rates is by installing solar panels. Solar power allows homeowners and businesses to generate their own electricity, reducing or eliminating their reliance on the grid and the ever-increasing costs associated with it.

Energy Independence

By installing solar panels, you can produce your own energy from the sun. This energy independence means you’ll no longer be subject to the whims of the utility market. As utility rates climb year after year, the amount you pay for energy will remain consistent — effectively locking in low costs for decades to come.

Locking in Low Costs

One of the most attractive features of solar energy is that the initial investment is fixed. Once your panels are installed, the majority of your energy production costs are already covered. While utility rates fluctuate and rise over time, your energy costs will remain steady, helping you avoid the financial strain of inflation.

Financial Incentives

The federal government, along with many states, offers financial incentives for installing solar panels. The federal solar tax credit currently allows homeowners to deduct 30% of the cost of installing a solar energy system from their federal taxes. Many local governments also offer rebates, tax incentives, or other benefits that make solar more affordable. However, these incentives won’t last forever. There’s been talk of reducing or eliminating some of these tax credits, rebates, and other solar incentives, which means acting now is more important than ever. Delaying could mean missing out on significant savings.

Get your free solar analysis today to see how much you could save. And calculator your solar savings with this advanced Solar Calculator.

More Financial Benefits of Going Solar

Beyond protecting you from inflation, solar power comes with a host of financial benefits.

Return on Investment (ROI)

Solar panels offer one of the best returns on investment of any home improvement or other investment options (i.e. stocks, bonds, and real estate). Depending on your location and electricity consumption, solar panels can pay for themselves in 6-10 years, with returns continuing for decades after the initial installation. With utility rates rising at an average of 5-10% per year, solar panels can save you thousands of dollars in energy costs over their lifespan. For example, if your electricity bill is $150 per month and utility rates increase by 7% annually, you could be paying over $250 per month in just 10 years. With solar panels, you could lock in today’s rates and avoid those increases entirely.

Learn more about the ROI of solar and how it beats many other investment options, such as stocks, bonds, and real estate.

Increased Home Value

Installing solar panels can also increase your home’s value. Studies by Zillow and other institutions have shown that homes with solar installations sell faster and for more money than those without. Buyers are willing to pay a premium for homes that offer lower energy costs and energy independence.

Learn  more about how solar panels add value to your home by reading our blog on the topic.

Battery Backup Systems

For those looking for even more protection from grid volatility, solar panel systems can be paired with battery backups. Battery storage allows you to store excess energy generated by your solar panels for use during the evening or during power outages. This not only provides energy stability but also further reduces your reliance on the utility grid.

Learn more about battery backup, how it can protect you, your family, and your business during power outages, and contact us today for your free battery backup quote.

Don’t Wait – Why Now Is the Time to Act

With utility rate inflation continuing to rise faster than consumer price inflation, now is the perfect time to take control of your energy future. Utility prices are projected to keep climbing due to fuel market volatility, infrastructure costs, and climate-related disruptions, which means waiting could cost you even more in the long run.

Declining Solar Costs

At the same time, the cost of installing solar panels has dropped significantly in recent years. Technological advancements and increased demand have made solar energy more affordable than ever. Coupled with federal and state incentives, the financial case for solar is clear.

Environmental Benefits

Beyond the financial advantages, solar energy also helps reduce your carbon footprint, contributing to the fight against climate change. By generating clean, renewable energy, you can help mitigate the effects of rising utility rates while also making a positive impact on the environment.

Install Solar Panels to Save Money, Fight Energy Price Inflation

Rising utility rates are here to stay, but you don’t have to accept the burden of higher energy costs. Solar power offers a proven, reliable way to fight back against utility rate inflation, lock in lower energy costs, and even increase the value of your home. With the cost of solar declining and government incentives still in place, now is the best time to invest in solar energy.

Take control of your energy costs today by exploring solar options for your home or business. Don’t wait for utility rates to rise even further—act now and protect yourself from future price hikes.

Take action today and see how you can reduce your energy bills and your reliance on constant energy price inflation. Contact Green Ridge Solar today to get your free solar analysis. 

And try our Solar Calculator to see how much you could save with solar.