What the Russia crisis means for U.S. electricity mix
Gasoline prices have spiked in the aftermath of Russia’s invasion of Ukraine, but the effects of the conflict are also spilling into the U.S. electricity sector, with implications for greenhouse gas emissions and energy policy.
Although the crisis isn’t expected to derail electric utilities’ broad shift toward cleaner energy sources, it could temporarily extend coal’s upswing in the U.S. and slow investments in new energy projects as prices continue to rise, analysts said.
The long-term effects, meanwhile, could touch on everything from nuclear power to renewable energy, as industry leaders expect wind and solar to remain more insulated from price shocks and sanctions targeting Russia than fossil fuels.
“Even with Russian and Ukrainian factions meeting at the border to discuss a military ceasefire, the fragile situation in Ukraine and financial and energy sanctions against Russia will keep the energy crisis stoked and oil well above $100 per barrel in the near-term and even higher if the conflict escalates further,” Louise Dickson, senior oil market analyst at Rystad Energy, said in a research note yesterday.
Global oil prices, meanwhile, have been at or near $100 a barrel in recent days.
For now, some economists predict the invasion and resulting sanctions aimed at crippling the Russian economy will further raise energy prices at a time when Americans are already paying more for electricity, heating and gasoline than they were last year. That could mean that new power generation projects may face more scrutiny from regulators concerned about whether the proposals could further raise consumers’ energy bills, said Travis Miller, senior stock analyst at Morningstar Inc.
While new fossil fuel projects may face the most scrutiny because of their contributions to climate change, fears about rising costs could also affect the prospects for renewable energy proposals seeking approval from utility regulators, he said. Inflation, which could be worsened by the crisis, could also raise the price of materials needed for new wind and solar panels, analysts added.