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Energy costs and the path to abundance

Energy Costs, Learning Curves, and the Path to Material Abundance

This page serves two goals. The first is abundance and post-scarcity, the idea that more of what people need could become so inexpensive to produce that rationing stops making sense, as discussed on Post-scarcity economy. The second is solving problems in living: energy bills, heating, cooling, and transport are costs that press hardest on low-income households. The thesis is that energy is an input to nearly every other cost, so the clearest practical path from scarcity toward abundance runs through the falling cost of electricity from solar, wind, and batteries, and the price learning curves behind them. The page asks why energy bills still hurt and what would have to change for energy to stop being a binding scarcity.

This page is general information, not financial or engineering advice.

Why energy bills still hurt

The United States Department of Energy defines energy burden as the share of gross household income spent on home energy. Its Low-Income Energy Affordability Data tool reports a national average of 6 percent for low-income households, three times the 2 percent estimated for other households, and over 30 percent in some areas. A burden of 6 percent or more counts as high. The tool also estimates that 52 percent of low-income households rent, a split incentive problem, because a landlord may not pay for upgrades that lower the tenant bill. It excludes transport.

Prices also differ by customer. The U.S. Energy Information Administration (EIA) reports that in 2025 the average residential price was 17.30 cents per kilowatt-hour, against 8.62 cents for industry. State averages ranged from 8.20 cents in North Dakota to 35.72 in Hawaii. EIA notes that retail prices cover generation, transmission, delivery, taxes, and fees, and that utility spending on distribution has passed spending on transmission and production. So a lower cost of generating power does not automatically reach a household bill.

How learning curves work

A learning curve says that the price of a technology falls by a roughly constant percentage each time cumulative production doubles. Aerospace engineer Theodore Wright described the pattern for aircraft in 1936. The percentage is called the learning rate. For example, at a 20 percent learning rate a price of 1.00 becomes 0.80 after one doubling, 0.64 after two, and about 0.51 after three. Doublings take longer as production grows, so price falls slow down unless demand keeps growing.

Our World in Data explains the cause as learning by doing: more production brings improvements, lower prices open new uses, and new uses raise demand. It also stresses that most technologies do not follow this pattern. Bicycles, refrigerators, and coal power plants do not fall in price exponentially as more are built. A learning curve is an empirical observation, not a law of nature, and it can stall.

Solar modules

Our World in Data reports that solar module prices fell from about 106 dollars per watt in 1976 to about 0.38 dollars per watt in 2019, a drop of 99.6 percent in inflation-adjusted terms. Cumulative capacity grew from 0.3 to 578,553 megawatts, about 21 doublings. The article gives a learning rate of about 20 percent, averaging 20.2 percent across several studies.

Lithium-ion batteries

Our World in Data reports that lithium-ion cell prices fell from about 9,200 dollars per kilowatt-hour in 1991 to 78 dollars in 2024, and that since 1998 each doubling of cumulative production has cut the price by roughly 19 percent. BloombergNEF reported in December 2025 that the volume-weighted average pack price was a record low 108 dollars per kilowatt-hour, down 8 percent from 2024. Stationary storage packs averaged 70 dollars, 45 percent lower than in 2024. IRENA reports that installed utility-scale battery storage costs fell 93 percent from 2010 to 2024, to 192 dollars per kilowatt-hour.

What falling prices add up to

IRENA finds that the global average cost of electricity from new utility-scale solar fell from 0.417 dollars per kilowatt-hour in 2010 to 0.043 in 2024, and onshore wind averaged 0.034. For comparison, IRENA gives 0.073 for coal and 0.085 for gas. In 2024, 91 percent of newly commissioned utility-scale renewable projects delivered power at a lower cost than the least expensive new fossil option. Way, Ives, Mealy, and Farmer, using forecasting methods tested on more than 50 technologies, concluded in Joule in 2022 that a rapid clean energy transition would likely save trillions of dollars, even before counting climate damages.

What inexpensive electricity could unlock

These are possibilities, not guarantees.

  • Desalination. A Lawrence Berkeley National Laboratory study estimated that desalinating enough seawater for 10 percent of potable demand in water-stressed United States coastal regions would need under 0.1 percent of 2018 national electricity use, and about 0.5 percent for all public water there. Electricity is a main running cost.
  • Indoor and vertical farming. Lights, pumps, and climate control run on electricity, so the price of power matters. This page has no verified cost figure for it.
  • Recycling and materials. Melting and refining use much energy, so lower prices help reuse.
  • Heat pumps. A heat pump moves heat instead of making it. The Department of Energy explains that a coefficient of performance of 2.0 means 2 units of heat per unit of electricity, and that heat pump water heaters can cut water heating electricity by 50 percent or more compared with resistance heaters.
  • Compute and local AI. The International Energy Agency (IEA) estimates that data centres used about 415 terawatt-hours in 2024, about 1.5 percent of global electricity, and projects about 945 terawatt-hours by 2030, just under 3 percent. In its base case that is under 10 percent of global demand growth to 2030, but data centres cluster in particular places, which strains local grids. Agent and compute workloads are electricity-hungry, so energy cost helps decide how widely local AI and agent services spread. See Running AI models locally and Local AI as a public library.

Bottlenecks that remain

Low-cost generation is not the whole system. IRENA reports that solar electricity costs rose in the United States and the European Union in 2024 because of permitting delays, interconnection bottlenecks, and higher balance-of-system costs. It also notes long lead times for transformers and high-voltage cables, and a CSIRO modelling estimate that integration costs can add 0.028 to 0.032 dollars per kilowatt-hour at very high shares of variable renewables.

Lawrence Berkeley National Laboratory reports that at the end of 2025 more than 2,060 gigawatts of generation and storage waited in United States interconnection queues. Where data exist, projects built in 2025 took a median of over 5 years from request to operation. Only 13 percent of capacity requested from 2000 to 2020 had reached operation, and 75 percent had been withdrawn.

Materials supply matters too. BloombergNEF noted that battery metal prices rose in 2025 because of lithium supply risks and cobalt export quotas, and that the industry absorbed them through more use of lithium iron phosphate batteries.

Why energy alone does not fix housing and care

Inexpensive electricity does not make land, construction labor, or health care labor inexpensive. Those prices rise for other reasons, covered on Why housing and care prices rise while goods prices fall. Energy can lower the running cost of a home, but not its rent.

What individuals and small communities can do now

Availability depends on where you live, so check official sources first.

  • Look for efficiency and weatherization help. The Department of Energy Weatherization Assistance Program serves low-income households and reports average savings of 372 dollars or more per year in a national evaluation.
  • Ask about community solar. The Department of Energy says nearly 50 percent of households and businesses cannot host rooftop solar. Community solar subscribers receive a bill credit, and at least one project exists in 44 states and localities. Read the contract terms first.
  • Ask local credit unions whether they offer small efficiency loans, which varies by area. See Credit union small-dollar loans and Basic income through credit unions.
  • Try Energy saving tips, and see Opportunity engineering and Income for raising household resources.

Limits of this explanation

Learning curves are statistical fits to past data, not guarantees. IRENA reported that the global average cost of new solar power rose 0.6 percent in 2024, and BloombergNEF reports upward pressure from raw material prices on batteries. Energy burden figures are survey estimates that differ between Department of Energy releases. The statements on farming, recycling, and energy as an input to other costs are reasoning, not measured results. Program rules change often.

Discussion questions

  • If generation is inexpensive but delivery is not, who should pay for grid upgrades?
  • What would count as energy no longer being a binding scarcity: a price, a share of income, or reliability?
  • Which technologies you use follow a learning curve, and which do not?

Essay ideas

  • Compare the solar and battery learning curves, and explain what could end each one.
  • Explain why inexpensive energy would help some problems in living much more than others.

AI prompt ideas

  • Ask an AI system to explain learning rates with a worked example using a made-up technology, then to check the arithmetic step by step.
  • Ask an AI system to summarize the main bottlenecks to abundant electricity and rank them with reasons.
  • Ask an AI system to list which official energy-efficiency programs a household in a named region should look up, and which claims need checking.

References

See also

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