More and more households are making the switch to fixed renewable energy plans, and right now they’re glad they did. Fossil fuels are soaring in price across the board, but the rise in natural gas prices is likely to hit consumers the hardest.
Market Data analysts are already predicting that natural gas price increases will continue to climb this winter. The primary cause for the increase is a growing demand and low supply. As countries move away from using coal they are switching to natural gas power generation. That has created a global demand for natural gas. But demand plummeted during the pandemic and natural gas producers dramatically cut natural gas production.
Now that the world is coming out of the pandemic, demand for natural gas has spiked and there’s a shortage in the supply. Although oil and gas companies are back to drilling, as the winter gets colder, heating demand is going to increase as well. That means natural gas and oil prices won’t likely go down and are more likely to get higher.
All of this comes as environmentalists call for a reduction in the use of natural gas. They cite mounting evidence that natural gas isn’t much cleaner than coal due to the methane it contains. And reports that show greenhouse gas emissions were higher than ever in 2020 despite a significant reduction in commuting and travel point to the fact electrifying cars isn’t the silver bullet. Plus, there’s growing concern over the safety of gas appliances because of the emissions that are released in homes.
The international attention natural gas prices are getting and concerns over personal as well as environmental safety have a very good chance of influencing energy policies in the U.S. in coming years. This is especially true given that the U.S. has signed onto the Global Methane Pledge, which aims to cut methane emissions by 30% over the next ten years.
Can Rising Natural Gas Prices Affect Renewable Energy Prices?
Prices are on the rise across the board, which can have a direct effect on the cost of your energy plan. But that isn’t the only factor to consider, especially if you have a renewable energy plan.
First off, there are a number of indirect costs connected to gas price hikes. The perfect example is increased production costs. The manufacturing facilities that make solar panels and wind turbines will have to pay more for the energy needed to make them. That increases the overall cost of the solar panels or wind turbines. Those costs are considered when wholesale energy rates are calculated. If it’s enough to push the wholesale price higher the rate the end user pays is almost guaranteed to go up as well.
There’s another consideration to factor into the energy equation. Consumer interest for energy plans powered by renewable resources began long before the hike in natural gas prices, and rising prices for fossil fuels will only get more people interested. But there’s only so much energy being produced by renewable resources and added to the grid at the moment. In the short-term as more renewable energy is added to the grid, that could cause a demand/supply issue that pushes higher costs of energy plans, similar to what’s happening right now with natural gas.
So what does that mean for consumers that have renewable energy plans right now?
Why You Want to Review Your Renewable Energy Plan Now
All of the price fluctuations can be frustrating for end consumers at home who see their monthly utility bills going up. But consumers in deregulated areas aren’t solely at the mercy of the oil and gas company supply chains. Competition among retail energy providers can help keep low rates as much as possible. And if there is a rate hike, consumers are free to look for another provider who might be offering something better.
To do that, the first thing you need to do is take a look at your current energy contract. You’ll specifically want to look for three things:
- If you have a fixed rate or variable rate plan. If you have a variable rate plan, no matter what the energy source is, it’s a good idea to make the switch to a fixed rate plan. Fixed rate plans give customers a way to control their energy costs for a period of time. Locking in a fixed rate for the next year or two could prove to be the most affordable option since energy prices are expected to continue increasing across the board well into 2022 before leveling off and hopefully coming down.
- When your energy plan expires. You’ll also want to see when your current plan expires. If you try to terminate early you may have to pay a fee. But if your plan is set to expire in the next three months you’ll definitely want to start considering your options.
- If you have the option to renew your energy contract. Customers that are currently on a fixed rate plan may have a hard time finding a new plan at the same price. If you have the option to renew the energy contract and continue paying your current rate, consider doing so, but usually there are requirements for renewal. Verde Energy gives customers the option to renew their plan, if they do so within 30-60 days of the plan’s expiration.
Want to know more about how the cost of fossil fuels could affect your renewable energy plan? Contact the Verde Energy customer care team to get your questions answered or discuss your energy plan options. You may also find answers to your questions in the Verde Energy FAQ.
Our team is here for you!