Electricity Costs Expected to Spike Under New Biden Policies

(DailyDig.com) – On July 2, the Bank of America Institute released a study which highlighted President Biden’s administration’s policies that have, and will continue to, increase the cost of energy.

Since the demand for electricity has increased significantly, the power infrastructure of the US is not able to supply the needs of an ever-increasing demand. The recent demand for drivers to use electric vehicles (EVs) over fuel-powered vehicles, expanding manufacturing, constructing data hubs for Artificial Intelligence (AI), and increasing the use of heat pumps will significantly increase the use of electric power.

The pressure to increase the supply of electric power will significantly increase the cost for all consumers. Recently, consumers have experienced some relief from the increased utility costs, as the study revealed a 1.4 percent decrease in the average payment this spring. Yet, that does not bode well for most consumers, as their current utility payments are much higher than they were in 2019. Also, electricity costs rose and are continuing to rise, which will obliterate any short-term relief.

Some of the policies, such as the push to replace fuel-powered vehicles with EVs and adopting heat pumps, will tax electric power infrastructure. Added drains on the electric infrastructure include the current boom in AI, which could easily require by 2026 somewhere between 18–28 gigawatts (GW), according to the study. Also, increased demand for electricity will add to the costs incurred by the Inflation Reduction Act (IRA), which has encouraged the manufacturing industry to return from foreign soil to the US, and the CHIPS Act, which encourages semiconductor research and production in the US.

The supply of electric power may very well reach an unreliable peak as the US power grid is currently being forced to shut down more reliable means of power, such as more affordable fuel capacities. Other energy sources, such as solar and wind, have proven to be less effective as replacements, potentially leading to a supply-demand crisis. According to the report, these green sources of energy are unreliable during severe conditions in the summer and winter.