Electricity costs likely to surge in new ways in a warming world


Climate change is likely to increase U.S. electricity costs over the next century by billions of dollars more than economists previously forecast, according to a new study involving a University of Michigan researcher.

The study shows how higher temperatures will raise not just the average annual electricity demand, but more importantly, the peak demand. And to avoid brownouts and absorb these surges, utilities will need to spend between $70 billion and $180 billion in grid upgrades — power plants and futuristic energy storage systems for which ratepayers would ultimately foot the bill.

“If you look at your own bill across the year, you’ll probably see that your usage is highest in the summer, when you’re running the air conditioning,” said Catherine Hausman, assistant professor of public policy at the Gerald R. Ford School of Public Policy.

“Climate change researchers know that when we look out over the next 100 years, things will get warmer and, on a per-person basis, use of air conditioning will rise. The question we asked was, ‘On the hottest day of the year, when people are maxing out on that, can the grid handle it?’ We build the grid for the hottest hour of the year.”

Hausman and colleagues urge electric grid planners to keep their calculations in mind as they draft 20-year procurement plans. They also have a message for policymakers.

“This means that climate change adaptation is going to be more expensive than we thought. And so mitigation efforts become more valuable — more worthwhile — because they can prevent these costs,” said Hausman, who is co-author of the study that appears in the Proceedings of the National Academy of Sciences. “Our findings should inform the cost-benefit calculations of climate change policy.”

The need varies by region. The researchers examined separately each of 166 load-balancing authorities. These are regions that regulators use when they’re examining the grid’s reliability.

To generate their cost figures, the researchers calculated the mathematical relationship between air temperature and electricity in each region. Then they plugged that into simulations that took into account climate models and two different carbon emissions scenarios identified by the Intergovernmental Panel on Climate Change.

One scenario represents “business as usual,” under which carbon emissions would continue to increase. The other is a scenario under which we stabilize emissions. Under both scenarios, if the nation were to experience temperatures like the ones predicted 100 years from now with today’s infrastructure, the grid would be overtaxed.

Under the stabilization scenario, demand on an average day would climb 3 percent, and on a peak day, 7 percent. They calculate a 152 percent change in the number of days experiencing the 95th percentile or above of demand. Absorbing this would require an investment of $70 billion.

Under business-as-usual, demand on a peak usage day would spike by 18 percent, and the number of days in the 95th percentile or above would go up by 395 percent. Preparing for this would cost $180 billion.

What exactly would that money pay for? Electricity storage technologies such as grid-scale batteries could work, but they’re still in the research phase. Advances in batteries or the use of electric vehicles for storage could smooth the peaks.

The study also nods to “time varying pricing,” which gives customers incentives to reduce their use at peak times. Solar power and wind power could help a bit, but not enough without better energy storage options. The sun and wind aren’t always on at peak demand times. Given the current state of technology, if the projected climate of 2117 were to occur tomorrow, Hausman said we’d need to build more fossil fuel plants to jump in on the highest demand days.

The researchers caution that this isn’t a “prediction” for several reasons. Yes, increasing temperatures may spur greater adoption of air conditioners, and as a result, greater temperature impacts, but they could also hasten development of more efficient air conditioners.

“We’re not trying to say this is the future scenario,” Hausman said. “We’re saying, ‘If the future climate were here now, what would need to happen to the grid to adapt to that warmer world?'”

The study is titled “Climate change is projected to have severe impacts on the frequency and intensity of peak electricity demand in the United States.” In addition to U-M, the study involved researchers from the University of California, Berkeley; Stanford University and the University of British Columbia.



  1. Joe Bob
    on February 8, 2017 at 7:29 am

    Climate change has a positive side. It’s been so nice this winter that I haven’t used as much gas or electricity to heat my home.

    • Thomas Wagner
      on February 9, 2017 at 5:08 am

      Yes, Michigan is in the unique position of being surround by the Great Lakes that buffer temperature extremes and reduce the potential economic costs of climate change. Benefits may include longer crop growing, lake shipping, construction, and out-door recreation seasons.

  2. Tom Wagner
    on February 8, 2017 at 1:36 pm

    Does this study consider that people become more adapted to and tolerant of higher heat in warm climates and less likely to turn on their (expensive) air conditioners? Anyone traveling in India or even Western Asia understand this.

  3. Todd A
    on February 8, 2017 at 3:44 pm

    With such a huge investment in grid upgrades potentially needed, it would seem that moving to distributed off-grid production makes a lot of sense. Capacity could be added at the household level using products such as the Tesla photovoltaic roof shingles and storage battery, which would reach peak generation just when needed, in the summer months.

    Grids are extremely wasteful, with substantial portions of the generated electricity being lost to resistance in the wires of the distribution system. If fossil fuels are used to generate that grid-distributed electricity, it merely serves to accelerate the growth of CO2 in the atmosphere as production increases, a vicious circle.

  4. David Anderson
    on February 9, 2017 at 8:50 am

    I wonder if the study took into account the increasing efficiency of buildings. In 2000, a high efficiency home air conditioner SEER (Seasonal Energy Efficiency Ratio) was 10. Today you can install air conditioning with a 26 SEER (2.6 times more efficient).

    Lighting has become approximately 10 times more efficient in the past 10 years, computer and monitors are more efficient, all directly lowering the load for air conditioners. In recent years we’ve been able to use lower capacity power substations for a given building size/use. The authors of the study seem to want policy makers to demand larger capacities when in fact we are typically over-sizing electrical power equipment using outdated electrical code standards. Perhaps the authors of the study have a tie to the manufacturers who profit from such changes? Or perhaps they haven’t considered enough factors.

    A look at the “big picture” is needed when assessing future needs. This title of the study seems written to scare us…”Climate change is projected to have severe impacts on the frequency and intensity of peak electricity demand in the United States”. Energy efficiency has improved tremendously in the last 15 years, so projecting no technological change in 100 years (the study uses predicted temperatures from 100 years in the future) to compare how our electrical grid will perform is quite a stretch.

    My hope is that science (without scare-tactic opinions) will prevail, and technology will continue to evolve to meet and overcome the challenges of a warming planet.

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