Electricity Price Growth Compared to Energy Source
Daniel Pruski
Author
04/12/2021
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I wanted to see how much an increase in using renewable energy affects the price of electricity.
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- [00:00:00.780]Hello,
- [00:00:01.260]my name is Daniel Pruski and I did a report on electricity price growth
- [00:00:05.940]compared to the energy source of the electricity and my motivation
- [00:00:10.830]for this report was that I think it's a common stigma that renewable energy
- [00:00:14.760]is more expensive than other energy sources.
- [00:00:17.940]And that is the trade-off for having pollution less energy.
- [00:00:21.450]So I really wanted to see if that was true or not,
- [00:00:23.940]because I think that some people think that that isn't true and that it's
- [00:00:26.850]actually similar to other energy sources. So I wanted to see if it,
- [00:00:31.770]there was actually an effect on focusing on renewable energy, uh,
- [00:00:35.700]and if that affected the price of electricity in areas at all.
- [00:00:39.270]So I mostly want to focus on renewable, but I also included natural gas.
- [00:00:42.810]Cause I think that's another energy source that's growing in popularity along
- [00:00:46.380]with renewable energy.
- [00:00:47.910]So my research question was largely to just does a growing focus on renewable
- [00:00:51.390]energy increased the price of Electricity.
- [00:00:56.460]So I got my data from the us energy information administration.
- [00:01:00.060]They had a lot of, um, data through the years based on, um,
- [00:01:04.320]electricity produced, where it came from price of electricity.
- [00:01:08.550]So in order to try to find a relationship between electricity price and renewable
- [00:01:13.440]energy, I just used a linear regression.
- [00:01:14.760]where I compare the increase in natural gas and renewable
- [00:01:18.180]energy, uh, with the electricity price.
- [00:01:21.180]So when I'm say increase in natural gas or renewable use,
- [00:01:25.350]I use,
- [00:01:26.820]I am compared to the percentage that a specific state uses a certain
- [00:01:31.440]certain energy source.
- [00:01:33.300]Like what percentage of all the electricity produced, um,
- [00:01:36.000]comes from this energy source, whether it be natural gas or,
- [00:01:40.550]renewables. Um,
- [00:01:43.160]so I used three time periods for the remodel. I used three Time periods.
- [00:01:46.970]I did 2004 to 2009, 2009,
- [00:01:50.420]2014 in 2014 to 2019,
- [00:01:53.570]I compare the electricity price and the percentage that percentage change of
- [00:01:57.980]natural gas, uh,
- [00:01:59.330]percentage mix and renewables percentage mix of total energy for each of those
- [00:02:03.050]periods. And I compare them and I compare and I, um,
- [00:02:07.700]regressed them with price. And I also in the model I included the time periods.
- [00:02:12.830]I, um,
- [00:02:13.940]did I am a variable to indicate whether it's whether it was a second or third
- [00:02:17.960]time period to see if there was any relationship with just time in general and
- [00:02:22.730]see if as time passes, um, if electricity prices changes at all.
- [00:02:28.280]So my results, so here are the results I am.
- [00:02:32.060]I did not find any significant, um,
- [00:02:36.470]any significance between the energy sources at all,
- [00:02:39.470]which I guess could be a good thing,
- [00:02:40.760]because I think that kind of disproves that renewables, maybe not,
- [00:02:44.720]maybe don't lead to more expensive, um, electricity prices per se,
- [00:02:50.210]but neither does natural gas. However,
- [00:02:52.370]I did find a very strong correlation between the time periods,
- [00:02:55.760]which means that electricity price in the United States has been increased. Uh,
- [00:02:59.810]the rate at which electricity price has been increasing,
- [00:03:02.440]has been decreasing as time goes on. So I had a bit more time.
- [00:03:07.020]I'd probably try to import coal into my results because as I was looking through
- [00:03:11.850]the data, every single, state,
- [00:03:13.980]it didn't matter where it was using less coal and some were using more
- [00:03:17.850]renewable. Some were using more natural gas in place of cool,
- [00:03:20.670]but altogether as time went on,
- [00:03:23.190]the coal used for a lot of States decreased a lot.
- [00:03:26.070]So that might be so perhaps coal is the main price driver for electricity.
- [00:03:30.840]And that's why as time goes on,
- [00:03:32.340]it seems that electricity prices increasing at a much slower rate because coal
- [00:03:35.820]might be the more expensive one. I don't know. That's um, that's just, uh,
- [00:03:39.600]I don't, I, like I said, if I had more time, I'd probably look into that,
- [00:03:42.510]but for now I can say with confidence that as time goes on,
- [00:03:46.480]electricity prices have been increasing at a much smaller
- [00:03:51.360]rate. So as I conclusion, we just allowed you to just,
- [00:03:54.660]what I said is that I found no significant effect, uh, that, uh, focus on any,
- [00:03:59.100]any energy source. The two that I used,
- [00:04:00.810]natural gas or renewables hasn't electricity price.
- [00:04:03.150]But I did find that as time has time has been going on electricity prices has
- [00:04:08.100]been increasing at a much smaller rate. Uh,
- [00:04:12.810]they both results does not take into effect, state, location, or state policy.
- [00:04:15.900]I did run another, a regression that took that into account,
- [00:04:19.350]but I didn't have find really any significant change or any statistical
- [00:04:23.250]significance among where, uh, once you geographical area,
- [00:04:26.730]the States were coming from, in terms of electricity price.
- [00:04:29.790]So I chose to omit it because it didn't really mean anything. It didn't,
- [00:04:34.410]it didn't change very much of my initial results, which I'm showing you. Right.
- [00:04:40.590]So I think it's, uh, I think interesting to when I see it,
- [00:04:43.020]wasn't exactly what I was looking for to find,
- [00:04:45.240]but I still think it's interesting nonetheless,
- [00:04:47.040]to see that electricity price has been decreasing as time the rate at
- [00:04:51.900]which you'd actually see prices increasing has actually been decreasing as the
- [00:04:54.990]times goes on. So we also like to thank you. Uh, thank, uh,
- [00:04:59.100]I talked to Eric Thompson and Dr.
- [00:05:01.050]Mitch Herian of the bureau of business research at the university of Nebraska Lincoln
- [00:05:05.160]for helping me with this project.
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