Retail residential electricity prices in the United States have mostly risen over the last decades. In 2023, prices registered a year-over-year growth of 6.3 percent, the highest growth registered since the beginning of the century. Residential prices are projected to continue to grow by two percent in 2024. Drivers of electricity price growth The price of electricity is partially dependent on the various energy sources used for generation, such as coal, gas, oil, renewable energy, or nuclear. In the U.S., electricity prices are highly connected to natural gas prices. As the commodity is exposed to international markets that pay a higher rate, U.S. prices are also expected to rise, as it has been witnessed during the energy crisis in 2022. Electricity demand is also expected to increase, especially in regions that will likely require more heating or cooling as climate change impacts progress, driving up electricity prices. Which states pay the most for electricity? Electricity prices can vary greatly depending on both state and region. Hawaii has the highest electricity prices in the U.S., at roughly 43 U.S. cents per kilowatt-hour as of May 2023, due to the high costs of crude oil used to fuel the state’s electricity. In comparison, Idaho has one of the lowest retail rates. Much of the state’s energy is generated from hydroelectricity, which requires virtually no fuel. In addition, construction costs can be spread out over decades.

The costs to run and maintain a new power plant in the United States vary greatly by the type of technology deployed. A geothermal power plant commissioned in 2024 and with the earliest possible year of operation being 2029 could be expected to have fixed costs around 163 U.S. dollars per kilowatt installed per year. The U.S. already operates 61 geothermal power plants, the majority of which are located in California and Nevada. Costs depend on multiple factors, such as raw materials used, location, access to infrastructure (like grid interconnection, fuel supply, and transportation), and labor requirements. U.S. power plant costs explained Fixed costs of power plants are generally composed of capital and land costs, which include labor as well as costs associated with obtaining approvals and permits. Nuclear energy has the highest estimated capital costs in the U.S.Variable operating costs depend on the amount of energy produced by the plant. For fossil fuel plants, fuel costs make up most of the operating costs. In contrast, renewables tend to have no fuel costs, except for biomass and waste plants. Labor and maintenance costs tend to make up the bulk of operational costs for these plants. Nevertheless, renewable energy sources such as wind and solar are largely self-run and have no significant variable costs. Levelized cost of energy generation Plant costs also depend on the level of subsidies received. For example, unsubsidized energy generation levelized costs in the U.S. were the highest for rooftop residential solar fittings. Due to their relatively small-scale deployment and dependency on sunny weather, rooftop solar installations need a comparatively long time to break even.