Rising Cost of Grid Electricity

Rising Cost of Grid Electricity

For a grid-connected streetlight, electricity is an ongoing cost. As demand grows and utilities invest in the aging grid, electricity rates continue to put pressure on municipal budgets.

From the above graph it can be seen that the cost of electricity has been steadily increasing in the last five years. Several factors are driving those increases. Demand is one of the biggest factors.  Data centers, EVs, and electric heating are adding new demand, with data center electricity use alone expected to roughly double between 2025 and 2030.

Second, the grid itself is another factor. Much of the U.S. power system is 40 to 70 years old and needs significant investment. Utilities are also adding new transmission lines, strengthening infrastructure against severe weather, and dealing with higher fuel costs. Those investments ultimately add to the cost of electricity.

Rates in California and much of the Northeast are already well above the national average, and the U.S. Energy Information Administration expects retail electricity prices to continue rising faster than inflation through 2026

Meanwhile, solar costs have been moving in the opposite direction. The cost curves for solar and grid electricity crossed around 2020, and the gap has continued to grow.

For streetlighting, there is another consideration. Many cities use flat-rate tariffs for unmetered lights, meaning they pay based on how much energy a fixture is expected to use rather than its actual consumption. That can limit the financial benefit of dimming. Solar takes a different approach by generating and storing energy at the light itself, reducing dependence on grid electricity.

For cities planning lighting programs that will operate for 10 or 20 years, that long-term difference in energy costs is making solar streetlighting an increasingly practical option.