For decades, energy rates in the US have been rising at a breakneck pace. Europe, however, is seeing a distinctly different trend in its energy market. The countries surrounding Germany, for example, have benefited from five straight months of energy price reduction. In March alone, the Platts Continental Power Index (CONT)—Europe’s measure of how energy prices in the continent are doing—dropped 18 percent from February to March alone.
What is causing this dramatic reduction in energy prices in Europe?
Renewable energy gains
The key to reducing the cost of energy in Europe has been gains in renewable energy production. Half of the energy produced in Germany, for instance, is 100 percent solar power; wind accounted for just under 40 percent of the power produced in Germany in December. In total, the wind and solar output in this country has increased by about two fifths—that’s an additional 6.5 TERAwatt hours of renewable energy. Germany isn’t alone either. The UK doubled its solar power output this summer; there are now over half a million solar installations dotting the geographically small nation (relative to the United States, which has less than a third as many solar installations).
Since most of the top renewable resources (solar, wind hydropower, etc) cost next to nothing once an infrastructure has been established, the ensuing price drops in the European energy market were inevitable.
Negative energy rates???
In some cases the changes incited by renewable energy use in Europe isn’t just reducing energy costs. In some cases, it is eliminating—or even reversing—them completely. For instance, energy rates in Germany turned negative last spring. This is due to the fact that solar installations were producing so much power that energy suppliers in the country paid customers for the excess energy.
When energy in Europe is so easy to obtain via solar panels that energy suppliers in countries like Germany are willing to pay customers for the excess energy produced, a drop in energy prices is inevitable.
Following in Europe’s Energy Footsteps
Right now, less than one percent of the energy produced in the US is solar, despite our nation’s abundance of sunny skies. If the energy market in Europe is ostensible proof that renewable energy can have a positive impact on the energy market, why aren’t we using more renewable energy here in the US?
Let’s take a look at why there isn’t more renewable energy being used in the US, and what is being done about this:
Fossil fuel energy supplier pushback
Let’s face it: there is a lot of money to be made in the energy industry. In the United States, fossil fuel energy is especially big business for everything from driving vehicles to powering our homes. Many energy suppliers in the US are so deeply invested in the fossil fuel industry that they stand to lose a great deal of money if fossil fuel use suddenly dropped.
As such, fossil fuel energy suppliers in the US and relevant groups have (somewhat successfully) been battling the proliferation of renewable energy in the US for years. As you can imagine, this has severely damaged our ability to get more solar, wind and hydropower production.
Although fossil fuel interest lobbying has been successfully suppressing renewable energy production in some states, other states are pushing back. Renewable energy mandates in states like New Jersey, Connecticut and California are forcing many fossil fuel energy suppliers in the US to get out of the way of progress.
States are also proactively helping to expand renewable energy use. New Jersey, for instance is taking the initiative to set up an expansive solar power infrastructure. Anyone who passes through the state is sure to notice how many of the streets are lined with solar utility poles. Energy rates in New Jersey are already benefitting from this drastic increase in solar energy production.
Although we are lagging way behind, the United States is working hard to catch up with Europe
While we will not see 50 percent solar production like Germany or insane summertime solar output like the UK, we in the United States will continue to make great strides towards following in Europe’s energy footsteps.