How Much Are Electricity Prices Expected to Increase in 2026?
First, it was eggs…
Then it was beef.
Now, electricity prices are also expected to keep going up, reaching double-digit percentage increases by 2026.
The latest data from the Energy Information Agency[1] forecasts the price of residential electricity in cents per kilowatt-hour will increase by +13% — +18% by the end of 2026.
The overall Consumer Price Index is predicted to increase by +11% — +14%, meaning that the price increase of household electricity could outpace overall inflation by up to 29%.
Not all energy costs are expected to go up. For example, the price of filling up your gas tank or heating your home could fall by -20% — -30%.
With some energy prices trending downwards, why is electricity going up?
(Source: Energy Information Agency)
Understanding the Rising Trend of Electricity Costs
Historically, residential electricity costs in the US have largely kept pace with the general rate of inflation.
However, that trend began to shift early in the 2020s, and the increase in electricity pricing is expected to outpace the general inflation rate for the foreseeable future.
Residential electricity prices in the US are measured in cents per kilowatt-hour (¢/kWh) and vary significantly from utility provider to utility provider and state to state.
Average Residential Sector Retail Electricity Price in the United States as of February 2025, by State
(Source: Statista)
Regional Variations in Electricity Price Increases
In February 2025, the average ¢/kWh rate for electricity in Hawaii was $0.41. At the same time, the average ¢/kWh rate for electricity in Nevada was $0.11, a difference of 30¢/kWh or 273%.
The regional disparities in electricity rates make for broad strokes when forecasting national average prices and how your bill will be impacted in actual dollars and cents.
However, a projected 18% increase in residential electricity prices by the end of 2026 is significant, no matter what rate you currently pay where you live.
Inflation and Its Impact on Electricity Pricing
When the average American talks about “inflation,” they typically refer to the rising cost of goods and services and the corresponding impact on their lives and bank accounts.
In recent years, the price of eggs has become a commonly used benchmark for rising prices because it’s something everyone identifies with.
The process of measuring inflation for economists and government agencies goes far beyond the price of a dozen eggs.
To calculate the general inflation rate, economists track the average change in prices of a “basket” of urban consumer goods and services, known as the Consumer Price Index (CPI).
The eight major categories tracked by the CPI are:
Housing
Food and beverages
Apparel
Transportation
Medical care
Recreation
Education and communication
Other goods and services
Household electricity costs are included in the Consumer Price Index under the Housing category.
Average increases in residential electricity bills are factored into the CPI and accounted for in the general inflation rate.
So while rising electricity rates directly contribute to the overall inflation rate, the relationship is a two-way street.
Broader economic inflation increases the costs for utility companies to produce and deliver power, which in turn leads to higher electricity bills reflected in the CPI.
Economic Factors Driving High Electricity Prices
Household electricity pricing is primarily determined by the fundamental economic principle of all market economies — supply and demand.
Unlike many other sectors of the US economy, the energy market is subject to government regulations, but supply and demand remain the primary factors determining residential electricity prices.
Increasing Demand Fuels Higher Electricity Prices
Electricity demand is growing at a staggering rate, particularly for commercial applications.
Increased demand from industry impacts household electricity prices primarily because the same raw materials and delivery infrastructure are often used for both.
The primary factors fueling unprecedented electricity demand include:
Massive new demand for artificial intelligence (AI) and cloud computing data center applications
Electric vehicle (EV) adoption
Increased air conditioner use due to rising average temperatures and extreme heat
Home electrification for heat pumps, induction stoves, etc.
Economic expansion and population growth
Supplying Electricity Is Getting More Expensive
The recent One Big Beautiful Act eliminates almost all federal government incentives for renewable energy projects, such as wind and solar farms.
The Residential Clean Energy Credit for homeowners has also been eliminated as of December 31st, 2025.
In recent years, record-breaking amounts of America’s overall electricity supply have come from grid-connected renewable energy systems, a trend that’s unlikely to continue in the foreseeable future.
Reduced renewable electricity generation capacity relative to demand will likely drive up prices for fossil fuels like natural gas and coal that are burned to create electricity.
The primary supply issues that are expected to drive up the cost of generating and delivering electricity are:
Rising cost of natural gas, which is the #1 source of electricity generation in the US.
Massive infrastructure investments required to maintain and upgrade aging grid infrastructure
Cost of building new power plants
The move away from clean, renewable energy sources like wind, hydro, and solar
Increasing frequency and severity of extreme weather events
Geopolitical Influences on Energy Supply
America’s renewed focus on domestic energy production has helped the country once again become an annual net total energy exporter since 2019.
However, a significant amount of natural gas is still imported from Canada via pipelines to meet electricity demand in summer for cooling and winter for heating.
The US remains a net exporter of natural gas, particularly liquified natural gas (LNG), which accounted for approximately 26% of total energy exports in 2023.
Much of the LNG exports go to Europe, where the ongoing Russian invasion of Ukraine has limited access to natural gas, severely impacting residential electricity prices.
Geopolitical instability caused by armed conflicts and “trade wars” tends to increase energy prices worldwide for numerous reasons, including:
Disruptions to the energy supply chain
Shifts in trading patterns
“Risk premiums” as investors hedge against supply chain interruptions
Geopolitical uncertainty has a cascading effect on US electricity prices, even if the events occur far from home.
Prepare for the Future of Higher Electricity Costs
With federal tax incentives for residential clean energy property, like solar panels and whole-home battery backup systems, ending in December 2025, there’s never been a better time to protect yourself from higher electricity costs.
You can still save 30% on the total purchase and installation costs of an eligible whole-home solar generator, as long as it’s installed before January 1st, 2026.
Any previously eligible photovoltaic modules and solar battery systems installed after the end of 2025 will not receive an IRS credit against personal income tax liability.
Taking advantage of all available federal, state, and local government incentives shortens your solar payback period.
Act soon to maximize your solar return on investment and save money on electricity bills for years to come.
If you live in a state that offers dynamic billing with time-of-use (TOU) rates, you save even more money on electricity bills by reducing energy consumption during peak demand hours.
Whole-home generators like EcoFlow DELTA Pro Ultra make integration with your home circuit board and wiring easy. With industry-leading home energy management software built in, you can optimize your household electricity consumption to only use grid power during cheaper off-peak billing hours.
With enough solar panels, you can achieve energy independence and eliminate electricity bills for good.
Final Thoughts
Skyrocketing electricity demand and constricted supply will likely drive household rates significantly higher for the foreseeable future.
One way to protect yourself from rising prices and slash your electricity bills is to invest in a whole-home generator like EcoFlow DELTA Pro 3.
It can reduce dependence on the power grid, provide reliable home backup during blackouts, and slash your electricity bills.
EcoFlow offers a huge assortment of off-grid power solutions tailored to meet your needs.
Check out our selection today.
Resources Cited
“U.S. Electricity Prices Continue Steady Increase - U.S. Energy Information Administration (EIA).” 2025. Eia.gov. 2025. https://www.eia.gov/todayinenergy/detail.php?id=65284.
“Highest Electricity Rate in the U.S. By State 2025| Statista.” 2025. Statista. 2025. https://www.statista.com/statistics/630090/states-with-the-average-electricity-price-for-the-residential-sector-in-the-us/.
Lakhani, Nina. 2025. “US Egg Prices Break Record High for Third Consecutive Month Even as Inflation Drops.” The Guardian. The Guardian. April 10, 2025. https://www.theguardian.com/food/2025/apr/10/egg-prices-break-record-high-consecutive-months-inflation.
“CPI Home.” 2023. Bureau of Labor Statistics. February 15, 2023. https://www.bls.gov/cpi/.
O’Donnell, James. 2025. “We Did the Math on AI’s Energy Footprint. Here’s the Story You Haven’t Heard.” MIT Technology Review. May 20, 2025. https://www.technologyreview.com/2025/05/20/1116327/ai-energy-usage-climate-footprint-big-tech/.
“U.S. Energy Facts - Imports and Exports - U.S. Energy Information Administration (EIA).” 2025. Eia.gov. 2025. https://www.eia.gov/energyexplained/us-energy-facts/imports-and-exports.php.
Servet Yanatma. 2025. “Three Years On: How Russia’s Invasion Reshaped Energy Prices across EU.” Euronews. euronews.com. February 24, 2025. https://www.euronews.com/business/2025/02/24/three-years-on-how-russias-invasion-reshaped-energy-prices-across-europe.
“Residential Clean Energy Credit | Internal Revenue Service.” 2023. Irs.gov. 2023. https://www.irs.gov/credits-deductions/residential-clean-energy-credit.
Groom, Nichola. 2025. “Boom Fades for US Clean Energy as Trump Guts Subsidies.” Reuters. July 24, 2025. https://www.reuters.com/sustainability/climate-energy/boom-fades-us-clean-energy-trump-guts-subsidies-2025-07-24/.
Geman, Ben, and Zachary Basu. 2025. “Trump’s Clean-Energy Grenade Rattles High-Tech Industries.” Axios. July 2025. https://www.axios.com/2025/07/01/trump-clean-energy-tax-credits-renewables.