Solar Panels Are An Ideal Inflation Hedge
Having Solar Panels on your roof is an excellent hedge against inflation. As the global energy supply is being depleted, utilities all over the world are warning of a sharp increase in prices. Thankfully, the prices of solar panels have not (yet!) risen at rates anywhere near the retail price of electricity.
Energy Inflation Is Soaring
Here in Maine, customers of CMP saw electric supply rates jump 83% in 2022, and the Maine Public Utilities Commission has just approved another supply rate hike of 49% for 2023. In addition, CMP has already proposed hefty price increases for 2024 and 2025.
Wouldn’t it be nice to avoid having to face an ever-higher monthly electric utility bill?
If you’re looking for a way to hedge against energy price inflation, solar panels can be a solid option. Not only can they reduce your carbon footprint, but they can greatly reduce or even eliminate your electric bill.
Electricity rates aren’t the only thing getting more expensive, though. Natural gas prices have skyrocketed in recent months, which directly contributes to higher electricity rates in New England – we rely a great deal on natural gas to fuel our power generation.
Solar Panels Have Come Down In Price
Despite their high initial cost, solar panels have come down in price-per-watt over the past decade, and right now are an ideal inflation hedge. They reduce your exposure to utility prices and offer a reliable source of energy for decades. They also provide peace of mind.
As the price of electricity continues to rise, solar panels are a great way to hedge against inflation and keep your electricity bill out of mind.
Utilities Worldwide Warning Higher Prices Coming
The cost of borrowing to fund projects is likely to increase as interest rates rise. This isn’t just a problem for the utility industry; it will also affect project developers with significant preconstruction investments. The Federal Reserve has been implementing tighter monetary policy to combat rising inflation, and the cost of capital is going to rise.
Global Energy Supply Is Shrinking
Despite the rise in renewable energy, global energy supply is shrinking. Coal, oil, and natural gas still make up the vast majority of global power generation. A growing number of countries are moving away from these fuels and using government regulations to reduce supply – regardless of increased demand. It is critical to reduce harmful emissions, which requires rapid investments in clean energy technology.
In the near term, the world will need to invest more in renewables and other clean energy sources to meet the growing demand for energy. The world’s energy needs are expected to increase 47 percent in the next 30 years, according to the US Energy Information Administration. This will require investments of $3.4 trillion in clean energy technologies until 2030. The largest contribution to global emissions reductions would come from energy efficiency.
Currently, renewable energy accounts for 26% of global electricity generation. By 2040, cleanly-generated electricity will be needed more than half of the total energy supply. In 2050, renewables will be the largest source of energy, overtaking oil.
During the next decade, demand for energy is expected to increase largely in developing economies, especially in Asia. Despite the growth in demand, coal-fired generation will continue to be the dominant type of base load power. But, as gas prices continue to rise, it will become more economic to replace some coal-fired generation with gas.
With the rise in energy demand, the world’s supply of fossil fuels is expected to continue to shrink. Less supply coupled with more demand is a recipe for higher and higher energy prices in the coming years.
Purchase your solar system now, and you can immunize yourself against yearly electrical rate increases.