Inflation and Rising Energy Costs

If you’ve been to the grocery store, or filled up your car at the pump, you’ve felt the sting of inflation. Gasoline prices alone have surged beyond 50% since last year. Small businesses are particularly vulnerable as their costs increase with no relief in sight. Inflation is at historic highs, not witnessed since the early 80’s, and the current geopolitics of oil and gas markets fuel volatility and price uncertainty. Think of inflation like a tax, yet in today’s climate, it’s accelerating much quicker than our income.

But what are the true drivers of inflation? What can consumers spending more than 8% of their household income on energy do to manage these inflating costs?

Rising Energy Costs Fuel Inflation
Energy was the lead driver of inflation in 2021, with costs rising 29% from 2020. Price hikes are not just felt at the pump–as noted by the IEA, electricity bills are also rising alongside fossil fuel prices. As energy costs continue to climb, consumers should consider some low cost home energy savings. Additionally, as a nation, we should look to alternative energy sources as a way to reduce medium to long term costs and enhance community and grid resilience.

Low-Cost Steps to Home Energy Savings
An initial step towards efficiency and energy savings is to conduct an energy audit of your home. A home energy audit is typically conducted by an efficiency expert and consists of a series of tests designed to pinpoint air leaks, test insulation levels, and gauge the efficiency of your home’s heating and cooling systems. Homeowners can also perform visual inspections for immediate gaps and quick savings. Implementing the recommended (or observable) changes to your home could reduce energy use up to 30%.

A step further includes home energy management systems (HEMS), which offer instant savings and allow homeowners to monitor their major consumption sources (HVAC, water heater, major appliances, etc.) and reduce costs. These systems are essentially software platforms that allow users to monitor both usage and production (included with solar systems). They also let users control, automate and schedule the use of energy within a household in order to save money and reduce waste. HEMS like Sense or Emporia Energy are rapidly gaining popularity with a range of options to better understand and optimize home energy. Innovative utilities such as Bandera and a few others even offer plans whereby homeowners become prosumers and monetize virtual energy systems.

The Energy Transition Offers Solutions
While making your home more energy efficient is an important way to save money and be more sustainable, it doesn’t fully shield us from US inflation and rising energy costs. The energy transition from fossil fuels towards solar and storage (including EV) offers immediate savings and a range of impactful solutions.

Oil and gas are especially volatile commodities, and our long-standing dependence is a primary driver of the price spikes we continue to experience. This volatility further results from some noteworthy factors; natural resources are limited with increasing costs of extraction, and global energy markets are easily and often manipulated, sometimes even for political gain. The current conflict in Ukraine highlights the vulnerability energy markets suffer from geopolitics: global oil prices skyrocketed to more than $100/barrel as Russia began its invasion. Climate change is also a driver of oil and gas volatility. Ironically, burning fossil fuels releases a range of contaminants into the air, accelerating the shifts in weather patterns and increased risk in upstream production. . Volatile energy prices have yielded record profits for many traditional energy executives and shareholders, while the average Americans deal with the fallout and grid uncertainty Texans witnessed last year.

How Renewable Energy is Inherently Deflationary
In response to US sanctions against Russian oil, fossil fuel advocates have called for increasing domestic production of oil and gas as a way of boosting supplies. This solution is short sighted, takes time to implement, and is increasingly difficult to finance. A long term, pragmatic approach to energy-exacerbated inflation is to accelerate alternative energy solutions immediately.

Alternative energy offers solutions to stabilize power prices across the planet. Unlike oil and gas, which are commodities pegged to natural resources, solar has evolved to reach commercial scale thanks to 50 years of technological innovation. In most cases, alternative power generation and storage will continue to reduce costs and gain efficiency. Increasing the mix of solar, wind, and hydro will stabilize energy because they have fixed costs with immunities to inflationary pressure. The wind and sun are renewable, and importantly, they are locally generated and thus less sensitive to geopolitics. Unlike fossil fuels, which are locked in a few key regions, alternative energy is widely distributed and can create locally sourced energy for the 80% of the world living in fossil fuel importing countries.

Centering our electric grid around more affordable access to alternative energy is key, and work is actually well underway. Solar, wind, storage and EV infrastructure increase at record growth every year. These cleaner alternatives will be harnessed to interact with increasingly smart homes and local energy. Building an economy fueled by local jobs, emerging career pathways and a shared mission of resilient grids and connected communities creates stability. We can all agree that today affordable and predictable energy is available. It’s time for us to decouple from impacts of energy inflation and Take Your Power Back!

It’s been a year since Winter Storm Uri wreaked havoc on Texas, leaving 4.5 million people without power as record low temperatures overwhelmed the state’s power grid, ERCOT. By the end of the week, at least 246 people had died with some sources estimating the number to be closer to 700. Not only that, but the Texas economy also suffered $195 billion in damages, making it the most costly natural disaster in the state’s history.

So what exactly happened during Winter Storm Uri, and what has the government done to prevent another disaster like this from happening?

The “Perfect Storm”
Uri was considered the “perfect storm” due to a combination of factors. One major problem arose from Texas’ reliance on natural gas. As gas production wells froze up, pipelines failed to function, and uninsulated gas lines couldn’t deliver power. According to a Federal Energy Regulatory Commission (FERC) and the North American Electric Reliability Corp. (NERC) report, the frozen gas supply caused 87% of the power outages. Another problem was the high demand for electricity from consumers, with some consumers using two weeks’ worth of energy in a single day. The power grid simply could not manage, and there were widespread blackouts across the state. The storm highlighted ERCOT’s vulnerability due to its isolated nature and the limited numbers of transmission lines across states. More transmission lines are crucial for a resilient grid, and could help Texas avoid another disaster like this in the future.

Legislative Changes
After the storm, a team was tasked with mapping out all critical power plants, natural gas facilities, and the transmission lines that connect them by September 2022. Additionally, Senate Bill 3 was passed which requires that the Public Utilities Commision (PUC) create winterization rules for power plants, transmission lines, and utility companies as well as penalties of up to $1 million per violation per day for noncompliance. However, there have not been any official studies that can show the PUC what exactly is needed to ensure grid stability, so the Commission is largely having to go off of intuition and stakeholder ideas.

Off-Grid Solutions
In response to the storm’s repercussions, many of NATiVE’s customers now opt for battery backup systems that allow inverters to isolate their homes and disconnect from the utility grid. This way, the house becomes an individual microgrid and is able to use the power generated by the house’s solar panels. With this system in place, customers are no longer at the mercy of the outdated, isolated, and aged infrastructure within the Texas power grid. Additionally, they will not have to deal with the uncertainty of rising energy prices, which have become a key driver of inflation across the nation.

Increasing Demand for Solar in Texas
Texas is on the right path towards grid modernization, but the journey has just begun. In 2021, wind and solar accounted for nearly all of ERCOT’s new generating capacity. To keep up with this increasing demand for solar in Texas, more people are needed to expand the solar workforce. To do this, NATiVE Solar and Solar Austin have created a practical training curriculum for high schoolers that allows students to gain hands-on solar installation experience. This program is currently underway at the Del Valle ISD Opportunity Center, and plans are in place to expand the program to other school districts in Texas this year.

Improving Grid Resilience
Expanding workforce and trade skills opportunities will create more jobs across Texas and provide the framework for a more resilient grid, decreasing our chances of another power crisis. Legislative changes that emphasize the need for a more flexible energy distribution system are crucial, and will play a major role in keeping our families safe in case of another catastrophic winter event. Consider going solar and having a battery backup system in place to decrease the chances of your home losing power due to freezing weather conditions. NATiVE is proud to deliver renewable energy to anyone in the Texas area who wishes to take the next step in creating a more resilient grid for all.