How much do electricity rates increase each year?

US residential electricity rates have risen an average of 3–5% per year over the past two decades. From 2000 to 2024, the national average rate roughly doubled. In some states like California and New York, rates have increased faster — over 6% annually in recent years.

Why does electricity escalation matter for solar savings?

When utility rates rise, solar becomes more valuable over time because you're avoiding increasingly expensive grid power. At 4% annual escalation, your electricity costs roughly double every 18 years. Solar locks in your energy cost at near zero, so the value of your system compounds significantly over its 25-year life.

How fast have electricity rates historically increased?

US electricity rates have increased an average of 2.5–3% per year over the past 20 years, though this varies significantly by state and utility. In some states like California, rates have risen 5–8% annually in recent years. This escalation is a key driver of solar's long-term value.

Why does electricity rate escalation matter for solar decisions?

The higher utility rates climb, the more valuable your solar system becomes over time. A solar system that saves $1,200/year today saves significantly more in year 15 if rates double. This escalation effect can add $10,000–20,000 to the total lifetime savings of an average solar installation.

Electricity Escalation Calculator

See how much your electricity bills will cost over 25 years if rates keep rising — and how much solar locks in savings by eliminating most of that future expense. Rising utility rates are one of the strongest arguments for going solar today.

Monthly Bill ($)

Rate Escalation (%/yr)

Projection (years)

About This Calculator

The Electricity Escalation Calculator projects your future utility bills assuming electricity rates continue rising at a steady annual rate — then shows how much solar eliminates from that total. U.S. electricity prices have risen at an average rate of roughly 2.5–4% per year over the past two decades, with some regions experiencing faster increases. At just 3.5% annual escalation, a $150/month bill becomes $214/month in 10 years and $354/month in 25 years. Over the full 25-year period, that household pays over $62,000 to the utility — far more than the cost of a solar system that would have offset 90% of that bill.

Electricity rate escalation is one of the most underappreciated factors in the solar value proposition. Most homeowners think about their current bill when evaluating solar, but the real comparison is against a 25-year stream of rising bills. The compounding effect of even a modest annual rate increase dramatically increases total lifetime utility spending. Every year you delay going solar, you pay an extra year of rising rates before locking in solar's effective zero marginal cost for the remaining system life.

Historical rate data is available from the U.S. Energy Information Administration (EIA) at eia.gov. Look up your state's average retail electricity price history to see your local escalation trend. States with regulated utilities (much of the Southeast) have historically seen slower increases; deregulated states (parts of Texas, New England, the Mid-Atlantic) have seen more volatility. Using your state's 10-year historical average is more accurate than the national average for projecting your specific situation.

This calculator is most powerful when used in combination with the Solar Panel Savings Calculator. Enter the same escalation rate in both tools to see the full comparison: escalating utility costs on one side, fixed solar system cost (with growing savings) on the other. The gap between those two numbers — in favor of solar — makes the case for going solar more clearly than any other single calculation.

Calculations based on NREL solar modeling data and industry-standard assumptions, built and maintained by the independent SolarToolsOnline research team.

Estimates only — not financial, tax, or legal advice. Verify important results with a licensed solar installer or financial professional before making decisions.