Future Energy Costs

September 30, 2019

Electricity prices will continue to rise, 95% of recently surveyed California business owners and operators agree. The question is how fast and how can businesses plan for this growing cost. Revel Energy traced back the average Commercial and Industrial energy costs back to 1990 and data shows an average of at least 3% year over year growth, this is a conservative estimate.

A business that spends an average of $10,000 a month in electricity today is projected to spend $139,113 in 2024, $161,270 in 2029 and $216,733 in 2039. These costs are substantial and will severely affect operating expenses which already run high for California businesses.

This business will spend over $3,000,000 in electricity from 2020 to 2039. Even with inflation, this expense will be tough to recover. The money lost could have either added to net profit or reinvested in the business. There are thousands of businesses like the one described above. How can California businesses manage these rising expenses?

Cause and Effect

Why are electricity rates increasing? There are several factors at play here. For California IOU’s, maintenance costs of an old, run-down grid continue to mount.

California’s electrical infrastructure recently received a D- grade from the American Society of Civil Engineers (ASCE). The cost of this work is passed through to customers. Read more here about ASCE’s report .

In 2018 California Governor Jerry Brown signed SB100 into effect. Under the bill, it mandates California energy must be at least 50% sourced through renewables by 2025. Further, the state must be 100% by 2045.

Some communities, like San Diego, have set higher goals of 100% in a much shorter timeframe. This is a large contributor to San Diego’s record-breaking energy rates.

California not only has one of the highest electricity rates in the US, but it also has the most aggressive plan for going carbon natural.

This policy is in effect on both the state and local level. One of the ancillary effects is rising costs which force businesses to use less electricity, through energy saving technologies like LED Lights or supplementing with renewables.

Solutions

Renegotiate your electricity rates.

Check with your electricity provider to make sure you are paying on the best rate plan that fits your business needs. If your business has high demand charges perhaps switch to a plan that accommodates those factors.

Contact a Revel Energy specialist to learn more about your electricity bill.

Upgrade to energy saving LED Lighting.

Upgrading your lighting to energy efficient LED bulbs is a fast and simple way to cut your electricity usage. Aside from the energy saving benefits, LED light bulbs last significantly longer than other types. This will greatly reduce your replacement frequency and costs.

Use Commercial Solar + Energy Storage to supplement your electricity usage.

California is one of the most solar rich states in the US. This free source of electricity is being rapidly adopted by California businesses looking to lower their electricity costs and carbon footprint.

Businesses that use commercial solar also gain a competitive advantage over their competitors by lowering operating costs, thus improving margins or lowering the pricing of their goods and services.

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