This article will cover countries where electricity prices are soaring and impacting the average utility bills. If you don't want to read about how electricity costs have changed in this recent inflation wave across the globe, go directly to 8 Countries With the Highest Cost Of Electricity.
According to the World Energy Outlook 2022, electricity accounts for 20% of the world's total energy consumption. Countries with the highest cost of electricity usually face these intensive prices because of increasing demand and dependency on imported energy. For instance, Italy, Austria, and Belgium have the most expensive electricity in the world as these nations' consumption of electricity is import-driven. Other factors that make electricity a costly commodity are infrastructure challenges and state-imposed taxes on end-user electricity provision. Also, the cost of fossil fuels, which still constitute a substantial portion of electricity generation, is subject to fluctuating global markets. Volatility in these markets can drive up the cost of electricity.
The global electricity market intertwines energy production, distribution, and consumption. The sector has undergone significant changes in recent years due to shifts in technology and consumer demand. According to Precedence Research, the electricity market is valued at over $1.94 trillion in 2023 and is expected to reach $3.9 trillion by 2032 at a CAGR of 8.4% between 2023 and 2032.
As of 2023, global electricity demand stands at approximately 27,000 TWh per annum, an increase of around 2% from the previous year. According to the International Energy Agency (IEA), electricity demand will pick up pace in 2024 and grow by 3.3% worldwide. Such high demand stems from population growth and economic development. According to estimates, the industrial sector consumes around 41.9% of the total electricity demand, followed by residential (26.92%) and commercial (21.5%) sectors.
If we talk about per capita electricity consumption, it has steadily increased over the past decade, reaching around 3,500 kWh in 2023. As of the last count, approximately 87% of the global population has electricity access, although significant disparities exist between developed and developing regions. For instance, per capita energy use reaches 53000 kWh per year in Iceland and 23000 in Norway, while the average consumption stands at 211 kWh in the least developed countries.
Notably, the electricity sector is seeing an ongoing shift towards renewable energy as the urgency of mitigating climate change is pushing nations to make concerted efforts to transition away from fossil fuels. As per Vantage Market Research, the renewable energy market, including wind, solar, and hydroelectric power, was valued at $988.26 billion in 2022 and is forecasted to reach $1.9 trillion by 2030 at a solid CAGR of around 8.6%.
The Energy Information Association (EIA) projects that the world's energy requirements will see a 50% increase by 2050, out of which, electricity use makes up a substantial part. EIA says that the residential end-use sector will see the highest growth in delivered electricity consumption.
These forecasts call for advanced electricity supply chains that make nations self-sufficient in electricity generation and distribution. In this aspect, the largest renewable energy companies, like NextEra Energy Inc (NYSE:NEE), are taking the lead. NexEra Energy Inc (NYSE:NEE) is one of the world's largest producer of wind and solar energy, whose wind energy capacity has nearly tripled in the last decade. The company's generation capacity was 55,000 megawatts of generating capacity in 2020, with over 90% of its electricity derived from clean or renewable sources. NextEra Energy Inc (NYSE:NEE) is also actively expanding its solar and wind capacity and is a key innovator in battery storage technology.
Likewise, Duke Energy Corporation (NYSE:DUK), one of the largest electric power holding companies in the US, is significantly invested in transitioning its energy portfolio towards cleaner sources. As of 2023, Duke Energy Corporation (NYSE:DUK) aims to achieve net-zero carbon emissions by 2050 and plans to at least double its solar, wind, and other renewable energy resources portfolio by 2025. Duke Energy Corporation (NYSE:DUK) provides electric power to approximately 8.2 million retail customers in six states in the Southeast and Midwest regions of the United States. Duke Energy also supplies natural gas to about 1.6 million customers across five states.
Dominion Energy Inc. (NYSE:D) is another noteworthy name trying to make energy resource-intensive and has an installed capacity of 27,100 megawatts. As of current, Dominion Energy Inc. (NYSE:D) is providing clean energy to nearly 7 million people and is one of the nation's largest producers and transporters of energy. Out of the total electricity supplied by Dominion Energy Inc. (NYSE:D), 3100 megawatts come from clean energy, owing to its advanced solar initiatives. As the global electricity needs are going up, these companies' clean energy initiatives and innovative storage technology present a positive future outlook.
Let's now find which countries have the highest electricity costs.
20 Countries With Highest Cost Of Electricity
20 Countries With Highest Cost Of Electricity
Our Methodology
To find electricity prices by country in 2023, we referred to the cost chart displayed on GlobalPetrolPrices. The countries with the highest cost of electricity have been ranked in ascending order of their electricity prices as of July, 2023.
Based on our findings, these are the countries with the most expensive electricity in 2023:
20. Jamaica
Average Electricity Cost Kilowatt Per Hour: $0.327
As of 2023, the average residential electricity rate is $0.327 per kilowatt-hour (kWh) in Jamaica. The price is affected by the country's reliance on imported fossil fuels for power generation. Although initiatives to shift towards renewable energy sources have been initiated, the transition is slow, maintaining Jamaica's position among the countries with the highest cost of electricity.
19. Luxembourg
Average Electricity Cost Kilowatt Per Hour: $0.335
Despite being one of the richest countries, Luxembourg experiences high electricity costs, currently at $0.335 per kWh. Luxembourg's high electricity prices are largely influenced by the country's lack of natural resources, which results in energy imports. The cost is further amplified by high taxes and levies imposed on energy.
18. Switzerland
Average Electricity Cost Kilowatt Per Hour: $0.343
Switzerland's high electricity prices come from the cost of maintaining its energy mix and transmission infrastructure. The average electricity cost for Swiss households is about $0.343 per kWh. Also, the country relies heavily on hydropower and nuclear energy, but costs remain intense due to a commitment to energy transition and the decommissioning of nuclear power plants.
17. Cyprus
Average Electricity Cost Kilowatt Per Hour: $0.368
High electricity costs in Cyprus stem from the island nation's geographic isolation and lack of interconnections with neighboring countries. While we see some ongoing efforts towards renewables, the energy sector still relies on imported fossil fuels, boosting electricity costs.
16. Finland
Average Electricity Cost Kilowatt Per Hour: $0.371
According to the International Energy Agency, Finland has a low reliance on fossil fuels. The country's current dependence on fossil fuels is 36%, well below the IEA average of 70%. However, since Finland has no domestic fossil fuel production and imports crude oil, natural gas, and coal, the country's end-user electricity costs are high.
15. Bermuda
Average Electricity Cost Kilowatt Per Hour: $0.427
Bermuda also heavily depends on imported fuel for power generation, which translates to expensive electricity. Not having significant local energy resources, combined with the geographical isolation and expensive infrastructure upkeep, contribute to this situation. The Bermuda Electric Light Company Limited (BELCO), the sole electricity supplier on the island, operates diesel-powered generating plants. In 2023, these plants still account for over 90% of the island's electricity supply.
14. Sweden
Average Electricity Cost Kilowatt Per Hour: $0.438
Sweden records an extensive use of renewable energy sources, but the country's electricity costs are still high. It's because regular infrastructure maintenance and continuous investments are required for green technologies. Also, the country's high taxes and regulatory costs make basic utilities like electricity costly. Sweden's commitment to phasing out nuclear power adds to the future cost uncertainty as it is currently responsible for the nation's 40% electricity.
13. Latvia
Average Electricity Cost Kilowatt Per Hour: $0.477
Latvia faces high electricity prices because of imports, primarily coming from Estonia and Lithuania. High transmission costs and the expenses associated with upgrading aging power infrastructure also elevate electricity prices in Latvia. As Latvia's grid becomes more integrated with the rest of Europe, these costs are expected to remain high in the near future.
12. Czech Republic
Average Electricity Cost Kilowatt Per Hour: $0.455
The Czech Republic's considerable amount of electricity is generated from coal. Therefore, the costs associated with emissions and environmental regulations have resulted in soaring energy prices. The country's ongoing transition towards renewable energy sources also contributes to the rise in electricity costs due to investment in new technologies and infrastructure.
11. Estonia
Average Electricity Cost Kilowatt Per Hour: $0.475
Estonia's electricity costs are amplified by its use of imported energy resources. The Baltic country relies on power sources like shale oil and renewable energy, but due to the challenges of extraction and implementation, costs remain high. Moreover, its connection to the European electricity grid and the necessity to abide by European Union carbon pricing can also elevate these costs.
10. Cayman Islands
Average Electricity Cost Kilowatt Per Hour: $0.481
As a group of islands, Cayman Islands' challenges differ from other countries that boost electricity costs. The Islands lack local fossil fuel resources and depend on imported oil for power generation. Likewise, the geographical dispersion of the islands makes extensive power grid infrastructures resource-intensive. On top of this, the tropical climate results in high energy demands for air conditioning.
9. United Kingdom
Average Electricity Cost Kilowatt Per Hour: $0.495
The transition towards low-carbon and renewable energy sources in the UK is beneficial for environmental sustainability. But at the same time, it has necessitated significant infrastructural changes, thereby inflating costs. The UK's extensive regulations and taxes related to carbon emissions also show in the people's electricity bills.
