How Climate Change Could Blow Up Your Electricity Bill

Higher temperatures brought on by global warming means that we use more air conditioning and fans to keep us cool. In addition, global warming will bring an increase in the frequency and intensity of heat waves. And that means higher electricity demand—and cost.


According to the EPA:

In a warmer climate, Americans will use more electricity for air conditioning and less natural gas, oil, and wood for heating. If the nation's climate warms by 1.8°F, the demand for energy used for cooling is expected to increase by about 5-20 percent, while the demand for energy used for heating is expected to decrease by about 3-15 percent.

But when it comes to calculating the anticipated increase in electricity costs due to a steadily warming world, economists have been way off. That's the worrisome finding of a recent study conducted by researchers from the University of Michigan, UC Berkeley, Stanford and the University of British Columbia.

In fact, the new research, which was published in the Proceedings of the National Academy of Sciences, indicates that over the next century, climate change will most likely increase power costs in the United States by billions of dollars more than economists previously thought.

A critical piece of this research isn't just on the projected increase in average annual electricity demand, but peak demand, which is a period of sustained demand that is significantly higher than the average supply level. For utilities, peak demand is a big concern, because those surges—which often occur when air conditioners are switched to the maximum setting—often lead to brownouts.

"If you look at your own bill across the year, you'll probably see that your usage is highest in the summer, when you're running the air conditioning," said Catherine Hausman, assistant professor at U-M's Gerald R. Ford School of Public Policy and co-author of the study.

"Climate change researchers know that when we look out over the next 100 years, things will get warmer, and on a per-person basis, use of air conditioning will rise. The question we asked was, on the hottest day of the year, when people are maxing out on that, can the grid handle it? We build the grid for the hottest hour of the year."

Find out the average U.S. electric bill in your area.

Since electricity demand varies by region, the researchers conducted individual examinations of each of the 166 "load-balancing authorities," specific regions utility regulators look at when determining the reliability of the power grid.

To ascertain predicted costs, they first determined the mathematical relationship between electricity and air temperature for each region. Then they inserted those calculations into simulated climate models using two different carbon emissions scenarios as established by the United Nations' Intergovernmental Panel on Climate Change.

Under the "business as usual" scenario, carbon emissions would continue to increase. In the more hopeful scenario, emissions are stabilized. The researchers concluded that, in 100 years, if U.S. temperature predictions are correct and the nation were still to have the current energy infrastructure, demand for electricity would outstrip the grid's ability to deliver—under both scenarios.

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Energy demand is expected to shift by the end of the century. The number of cooling (or heating) "degree days" refers to the sum of the number of degrees each day's average temperature is hotter (or colder) than 65°F over the course of a year. As the figure shows, the increase in the number of cooling degree days is expected to be larger than the decrease in number of heating degree days, comparing the historic average and the projected average over the final two decades of this century. (Source: USGCRP 2009 via EPA)

Hausman and her colleagues calculated that a $70 billion investment would be required in order to prepare for the stabilization scenario, while $180 billion would be needed for the business-as-usual scenario.

Those investments would cover various upgrades to the nation's energy infrastructure, such as better batteries, including grid-scale batteries, which are currently in research phase, or even using electric vehicles to store electricity. The researchers also point to "time varying pricing," which would incentivize customers to reduce their energy usage during peak times.

While the authors of the study want their calculations to be considered in electric grid planners' drafts for 20-year procurement plans, they also want policymakers to heed the new research, as it has budgetary implications for climate change planning.

"This means that climate change adaptation is going to be more expensive than we thought. And so mitigation efforts become more valuable—more worthwhile—because they can prevent these costs," said Hausman. "Our findings should inform the cost-benefit calculations of climate change policy."

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