It’s no secret: Electricity prices are rising faster than general inflation, stressing American budgets and businesses’ bottom lines.
At a time when America needs every available source of electricity to power economic growth, bad and outdated policies take affordable power off the table.
Those policies won’t just raise electricity prices. They could undermine U.S. competitiveness in manufacturing, artificial intelligence, and other industries driving the next generation of economic growth.
THE ONLY MOVEMENT THAT CAN RESUSCITATE THE AMERICAN DREAM
As costs increase, restricting competition among available power sources could further exacerbate the nation’s affordability crisis and threaten future growth in key economic sectors, including manufacturing and AI data centers. Fortunately, the United States is blessed with abundant domestic energy resources, from fossil fuels to renewables to the American ingenuity that fuels advanced technologies, which can help control upward pressure on energy prices.
But too often, our energy challenge isn’t about what we can build — it’s about the policies and regulations that prevent us from building it. Congress can and should enact technology-neutral policies that enable competition among all resources and remove regulatory barriers that hinder deployment.
Economywide, constraining new solar and wind resources could cost the U.S more than $121 billion beginning in 2027 through 2033, according to a new CEBA analysis. That’s real money coming out of household budgets and business balance sheets.
CEBA commissioned the study, performed by NERA, to model the impact on electricity and natural gas prices.
Our analysis found that the average U.S. price of electricity could be more than 6% higher over a seven-year period if new solar and wind resources are constrained. Put another way, restricting these resources would effectively add an extra year of inflation to electricity prices.
In Texas, the impact is even greater. Households served by the state’s grid operator could see electricity prices increase by more than 22% over the same period if new solar and wind resources cannot compete — the largest increase among the regions studied.
Notably, our analysis employed conservative assumptions, suggesting that constraints on new solar and wind resources could drive economy-wide energy costs even higher than our projections indicate.
The economics are straightforward: Prices rise when demand exceeds supply. Americans have experienced this recently at the gas pump, and we are poised to see similar effects in electricity markets. As growing industries require more power, the U.S. could struggle to keep pace with demand, particularly if abundant, available resources are artificially constrained. Affordable electricity starts with competition, not constraints.
Decades of underinvestment in the nation’s electric grid have left us with an aging system that is ill-prepared to handle the projected surge in demand. The result? Higher costs and potentially lower reliability, making deployment of all available resources even more important.
In recent years, solar and wind have become increasingly competitive, low-cost sources of electricity. Perhaps most importantly, they are among the few resources that can be deployed quickly enough to help address near-term demand challenges. While many generation technologies can take seven years or more to plan, permit, and build, solar and wind projects can often be deployed in just two to three years, absent unnecessary regulatory barriers.
Without question, the U.S. will need additional natural gas generation to meet projected demand, and we must continue investing in carbon capture and storage technologies.
In short, constraining new solar and wind resources would increase energy costs for American households and businesses. Winning the AI race depends on access to affordable, reliable electricity, making rapid deployment of new energy resources critical to maintaining America’s technological leadership.
America cannot regulate its way to affordable electricity.
WHY YOU’RE PAYING MORE AT THE PUMP — AND WHO’S REALLY IN CONTROL
If demand is rising, the answer is simple: build more supply. That means clearing the way for all resources that can compete in the marketplace — not restricting them.
The choice is straightforward: competition or constraint, abundance or scarcity, lower costs or higher prices. Policymakers should choose accordingly. It’s time to enact technology-neutral permitting reforms that unleash all American energy resources, meet growing demand, and protect consumers from unnecessary cost increases.
Rich Powell is the CEO of CEBA, the Corporate Energy Buyers Association.