Is solar a good hedge against inflation? Last month, Americans faced the highest rate of inflation in 40 years. The impact of rising prices is the most obvious in the energy sector, where supply chain constraints and the ripple effects of the war in Ukraine could result in households spending about 23% more on energy and transportation this year than in 2020.
That makes for a precarious situation for many American families. Already, 20% of American households across the country are reducing or forgoing food and medicine to pay their energy bills. Double digit cost increases in energy and transportation could push these families to the edge.
With no relief in sight, lawmakers must do everything in their power to improve energy affordability for their constituents. Clean energy can stabilize energy costs and save families money, helping to mitigate the effects of inflation. Lawmakers already have a blueprint to invest in clean energy through the Inflation Reduction Act of 2022 — now it’s time to get this legislation across the finish line.
The Solar Energy Industries Association (SEIA) is calling on Congress to pass clean energy investments and ensure every American has access to affordable energy now and for decades to come. Here are three ways that delivering an #AmericanEnergyDeal can combat rising energy prices.
1) Saving Through Solar
Households and businesses that go solar can significantly reduce their electricity bills by producing their own power. For example, homeowners with rooftop PV save $10,000–$30,000 on electricity costs over the lifetime of the panels, and state-level policies like net metering can compensate solar owners for the excess energy they generate by selling this electricity back to the grid.
And for households and families that are unable to install solar panels on their home, community solar is a great way to stabilize energy costs and take advantage of the cost-saving benefits of solar energy. While there are a variety of community models, customers typically subscribe to an off-site PV array and lock in their rates and energy savings for years to come.
Community solar can reduce energy costs and lead to bill savings of up to 25%, lessening the energy burden for low- to moderate-income families.
2) Stable, Reliable, and Secure Access to Solar Energy
Unlike fossil fuels that must be continuously extracted, transported, and combusted, solar power plants are fueled by free energy from the sun and have low maintenance costs.
Fossil fuels are also part of a global market which can experience extreme price swings based on international events. The average gas price increased by 60% from January 1 to June 1, 2022, reflecting the ripple effects of Russia’s war in Ukraine. Meanwhile, solar energy is produced domestically, helping to insulate it from external factors, shore up energy security, and ensure that ratepayers always know what to expect next to the dollar sign on their bills.
3) Maintaining Cost Declines for Decades to Comes
While solar costs have been dropping for more than a decade, for the first time since 2014, PV system costs increased across all market segments last year due to pandemic-fueled supply chain constraints and trade instability.
Passing a budget reconciliation package focused on clean energy would help counter rising price trends. For example, a long-term extension of the solar Investment Tax Credit (ITC) would provide certainty for clean energy investors and drive a sixfold increase in solar capacity by 2032. In addition, investing in U.S. solar manufacturing would relieve global supply chain constraints and trade vulnerabilities, all while boosting manufacturing jobs in the United States.
Time is running short for Congress to invest in clean energy and unlock more affordable energy prices for American families. The Solar Energy Industries Association is urging lawmakers to heed the abundance of evidence on the cost-saving powers of a solar-powered future and pass an American Energy Deal.
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