During the recent economic crisis many people asked the question, will electricity prices go up in the future as demand for electricity rises? The answer is no, electricity suppliers have contingency plans in place for any situations that may arise. These include increasing usage by industries such as mining, infrastructure development and so on. In fact one of the reasons why electricity prices have decreased over the past few years has been because of increased demand which led to over usage.
Another reason electricity prices have decreased over recent years has been because of falling energy demand in some countries. For example, in some countries there are major power shortages and this has resulted in reduced demand for electricity. One of the reasons why countries have suffered from reduced electricity demand is because of climate change. Many countries are experiencing extreme weather conditions and the reduction in tourism due to weather conditions has meant a drop in electricity demand.
There are countries that export large amounts of electricity to other countries such as the USA and the UK and they do not suffer financially as a result. Other countries such as China are starting to develop their own coal based electricity producing plants as well as creating more hydro electricity stations. As these countries develop more of their own electricity supply, it means that electricity prices will continue to fall.
There are a number of factors that affect the amount of electricity produced and used in an economy. The size of the economy will determine the demand for electricity as well as the amount of power created. For example the number of industrial zones can determine the amount of electricity that is produced and used. The type of economy will also determine the amount of electricity produced. For example an industrial based economy will need a lot of electricity generated to operate because of its size and will consequently need to produce more electricity than a service based economy will.
Governments often control the electricity supply to certain areas of the country by controlling the amount of power that can be generated. However, this also affects the amount of electricity that consumers are willing to pay. If the amount of electricity supplied by electricity suppliers is more than the demand then the consumers will pay more than necessary for electricity and this leads to increased inflation. Inflation is also an important factor that influences the growth of the economy.
It is expected that electricity prices will continue to increase over the coming years. This is because there are many factors that can affect the electricity supply and the amount that is being produced and consumed. The size of the economy and the level of consumer demand will determine how much electricity is produced and how much is required. If the economy grows the level of demand for electricity will increase . . . . . . and so the prices will also increase. Rising electricity prices are likely to have a negative effect on economic growth. The main drivers of increasing electricity prices are the increasing level of consumer demand, the increasing level of production and the increasing level of competition among electricity suppliers.