Cost Per KWH By Source

Are you trying to find ways to save on your electricity? Considering the cost per kWh of different energy sources? 

Congratulations!

Most people never even think about their electricity, and that can cost you. But before you go delving into the maze of the Texas electricity market, you need to hear about the single best way to find electricity:

It’s Called Power Wizard!

Try our Shopping Tool today and discover a better way to shop.

 

The big state of Texas comes with some big choices when deciding how to best source electricity for your home or business.

In Texas, you have a choice between several different electricity sources, and making this choice is no easy feat.

There are so many factors and considerations to take into account when making this decision.

How will you know where to start?

In this guide, you’ll find out how the cost per kWh by source affects the electricity rate you pay as well as how to find the electricity plan that is right for you.

Electricity Sources in Texas

Texas is the largest energy-producing state in the union, accounting for 37% of the nation’s crude oil production and 24% of the nation’s natural gas production in 2017.

In addition to being the largest energy-producing state, Texas is also the largest energy-consuming state in the nation.

Luckily, Texans like you have a lot of options when it comes to selecting their preferred energy source for their homes or businesses.

Some of the most popular choices are:

• Natural gas
• Wind
• Solar

Natural Gas

Natural gas is a great energy source option for your home because not only is it a highly efficient form of energy, but it’s also extremely clean-burning.

But what exactly is natural gas?

Natural gas is an energy source generated by fossil fuels found deep below the earth’s surface. Natural gas is made of several different components, the largest being methane.

Natural gas is a very popular energy source because there are so many benefits to its use:

• It burns quickly and reliably, providing a dependable source of energy
• It’s energy-efficient, working harder with less waste than electricity
• It’s naturally cleaner, resulting in fewer carbons emissions than electricity
• It’s cost-effective

Natural gas sounds like a pretty awesome energy source, so why should we even bother to look any farther?

The truth is, there are a lot of negative aspects surrounding natural gas as well, such as:

• It must be heavily processed, resulting in many negative byproducts
• It is highly flammable, with the possibility to cause severe damages
• It is a finite resource and is not sustainable
• It requires expensive pipelines, specialized tanks, and other costly equipment

Wind

As energy usage continues to rise year after year steadily, energy providers across the globe are turning more and more to renewable energy sources.

Wind energy is the second most commonly used renewable energy source in the world.

China is currently the largest consumer of wind energy in the world, followed by the United States. Here in the US, Texas both produces and uses more wind energy than any other state in the country.

In 2019, Texas used more energy produced from wind than coal.

Wind energy is produced on wind farms by using giant turbines to capture and convert energy from the flow of wind into electricity.

Some of the benefits of wind include:

• It’s a clean energy source that does not pollute the air
• It’s a renewable resource that will never run out
• It has no negative environmental effects, like smog or acid rain
• Production costs are low because the wind is a free resource
• Wind turbines can be installed on current farms, serving as an additional form of income for many landowners in rural areas

Some of the downsides to wind energy include:

• Lack of wind prediction and reliability
• Cost of transporting energy from the wind farms to the cities
• Potential for noise and visual pollution
• Environmental effects including land clearing and the threat to wildlife

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Solar

Solar energy is the newest up and comer in the world of renewable energy sources.

Solar energy is produced by converting radiant energy from the sun into heat, hot water, and electricity.

Currently, solar power is the third-largest source of renewable energy in the world, but its popularity is increasing as the cost continues to decline.

Over the past 5 years, the average growth rate of solar energy has been 25%, making it the fastest-growing renewable energy source.

In Texas, solar power currently provides about 2% of the state’s power, but it is estimated to grow rapidly in the state over the course of the next 2 years.

Some of the benefits of solar power include:

• It’s an unlimited power source
• Lower production and maintenance costs
• There are no negative environmental effects
• Lower long term costs for homeowners
• Many government-sponsored incentives for converting to solar power

There are, of course, a few downsides to solar power as well:

• There’s the potential for higher upfront costs to homeowners
• Solar power may not work well for every home
• Potential for visual pollution

How Does The Source Of Electricity Affect Prices?

There are many factors to consider when determining the cost of electricity.

The biggest factor to consider when determining the cost of electricity, just like in pretty much every market, is simply supply and demand.

The higher the demand and the lower the supply, the higher the cost will be.

For example, consumers will often see spikes in energy costs during the hot summer months because the demand for electricity is typically at its highest during this time of year.

Additionally, there are other factors that affect the prices of electricity depending on the source.

1. Natural Gas
   Factors to consider include the cost of obtaining the fuel, operational costs of the refineries and power plants, transportation and distribution costs, and any associated regulation fees.
2. Wind
   Factors to consider include operational costs of the refineries and power plants, transportation and distribution costs, weather conditions, and any associated regulation fees.
3. Solar
   Similar to wind, factors to consider include operational costs of the refineries and power plants, transportation and distribution costs, weather conditions, and any associated regulation fees.

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The Cost of Electricity Per kWh By Source

In addition to the factors listed above, there is one more big factor that contributes to determining the cost of electricity.

This factor is availability.

Does the power source have a finite supply, or is it limitless?

Non-renewable energy sources, such as natural gas have a limited supply. Even though there is still a massive amount of natural gas available today, eventually, we will run out of this resource.

Due to this, non-renewable energy sources are typically priced a bit higher.

In contrast, renewable energy sources, such as wind and solar power, are limitless. Although there will be days that lack large amounts of wind or sun, we will never run out of these resources. They are virtually never-ending, limited only by our ability to harness them and turn them into useable forms of power.

Due to this broader availability, renewable forms of energy are typically priced lower than their non-renewable counterparts.

The national average for wind power is 4-9¢ per kWh, while solar power ranges from 6-10¢ per kWh. It is estimated that as more wind farms and solar plants are built, these costs will continue to decline.

How Much Does Natural Gas Cost Per Kilowatt Hour?

Natural gas is currently the most commonly used source of electricity in Texas, accounting for 50% of the state’s total power usage.

Not only is natural gas a cleaner source of energy than more traditional sources, but natural gas is also a cheaper alternative as well.

While the actual price for natural gas does fluctuate based on the market demand at the time, it is almost always cheaper than electricity. The national average for natural gas ranges from 7-10¢ per kWh, while the per kWh price for electricity averages about 11-16¢ nationwide.

Switching your appliances over to gas appliances can often save you as much as 30% per month off of your power bill.

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What Is The Most Expensive Renewable Energy Source?

When it comes to renewable energy sources, solar power is currently the most expensive form.

There are a few reasons why solar energy is currently more expensive than wind.

1. The initial cost
   Harnessing solar energy requires solar panels, and solar panels are not cheap. Quite often, this initial cost can be outside of the budget of an average American family. So even though the per kWh cost for solar power is very similar to that of wind, this initial cost alone often makes solar power much more expensive overall.
2. Availability
   While the solar energy market is currently growing like wildfire, it still only provides about 2% of the power used in Texas. This limited supply currently available is another factor that causes solar power to be the most expensive form of renewable energy.

What Is The Cheapest Source Of Electricity?

So, at this point, you’re probably scratching your head and wondering…

What is the cheapest form of electricity?

The cheapest source of electricity is going to be the one that has the lowest overhead acquisition and production costs, which means it will be a renewable energy source.

Renewable energy sources, also called ‘green energy, generated from natural resources like the wind and the sun are the cheapest sources of energy because they are free and never run out. The only overhead costs associated with renewable energy sources result from harnessing the energy source and converting it into usable electricity.

Currently, when taking into account all of these factors…

The cheapest renewable energy source here in the US is onshore wind.

Find The Best Electricity Plan

So now that you know the cheapest source of electricity, you’re probably ready to sign up for a plan, right?

Well, unfortunately, it’s not that easy.

Due to limited availability, you might not be able to choose a company and plan based solely on the source of electricity. Your desired source may not even be available in your area.

It’s also very important to realize that the cheapest electricity plan does not always equal the best electricity plan.

Every household has different needs when it comes to electricity usage, and the trick is to find the plan that best fits your own unique needs, which are most often very different from the needs of your relatives, friends, or neighbors.

As you may already know, electricity has been deregulated in Texas since 2002.

The upside to this deregulation is that you, as the consumer, now have the ability to choose both your Retail Electric Provider (REP) as well as your specific electricity plan.

However, this power to choose your REP is also the downside as well.

You have the option to choose from 160+ REPs in Texas. Between those 160+ REPs, there are thousands of plans to wade through when trying to find the best plan to fit your needs.

That is a tremendous number of options to research and choose from, which can often be more stressful and overwhelming than trying to write a master’s thesis.

In order to find the best plan, you have 2 options.

1. Searching manually is often more painful than pulling teeth.
2. Power Wizard’s automatic search – your ‘easy button’ for electricity plans.

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Manual Search (Worse Than Pulling Teeth)

Alan is in the process of moving to Plano and needs to select his energy provider soon. He’s always prided himself on his independence and plans to find the best power company for himself.

He starts the process by googling the available power companies in his area.

There are over 160 REPs to sort through.

Alan realizes he’s in for a long night and decides to brew a pot of coffee.

6 hours later, feeling super confused with a pounding headache, he’s only ⅓ of the way through the list of 160 REPs. He hasn’t even started the process of reviewing the various plans each of these 160+ companies offers.

After spending every evening for a week agonizing over his research, creating massive spreadsheets, and comparing plans, Alan finally thinks he has his options narrowed down and finally makes his selection.

In the back of his mind, despite the hours of research, he still has a nagging question.

How can I be 100% sure that I chose the right company?

Unfortunately, for Alan, it’s impossible for him, or anyone, to be 100% confident in their choice using this manual method.

Automatic Search (Like ‘The Easy Button’ But For Electricity in Texas)

Luckily, for both Alan and you, Power Wizard has an easy button for that!

All you need to do is give Power Wizard 5 minutes of your time and some basic information such as:

• Location of your home
• Age of your home
• Size of your home
• Your historical power usage

Power Wizard’s automated and unbiased algorithm will then instantaneously match you with the very best plan for your unique and individual needs.

That’s it.

Unlike Alan, by using Power Wizard’s Shopping tool, you will be able to sleep headache-free, knowing with 100% certainty that you’ve chosen the very best plan for you!