Electricity prices are affected by a wide variety of factors, including resource and energy distribution, economic development, political system, infrastructure development, etc. Below we take a closer look at electricity cost trends based on these factors.
Resources and energy distribution: Energy sources that can generate electricity include fossil fuels (coal, gas, oil), nuclear power, wind power, solar power, and hydroelectric power, but the form of electricity supply varies greatly depending on the natural resources of each country and region. For example, electricity costs tend to be relatively low in countries and regions with abundant hydroelectric resources (Canada, Russia, Norway, Nepal, Paraguay, Kyrgyzstan, etc.). Countries with abundant oil and gas resources (Kuwait, Iraq, Iran, Saudi Arabia) also have low electricity prices. On the other hand, electricity costs tend to be high in countries that are heavily dependent on imports of fossil fuels such as oil and gas, including Japan.
Economic development: In developed countries with developed economies, electricity supplies are usually stable, but this often translates into high electricity costs. Conversely, in developing countries, electricity prices are often low, but there are many people and companies that need electricity, so there is often no stable surplus electricity, and consuming large amounts of electricity for Bitcoin mining can be politically sensitive.
Political system: Electricity prices are also greatly affected by political systems. Electricity pricing is often set low, especially in communist and socialist countries, but there is often a lack of funds to develop long-term electricity infrastructure, and the equipment is often aging. On the other hand, in democratic countries, electricity prices are often determined by market supply and demand due to competition between electricity suppliers, but electricity prices are often high.
Infrastructure development: The development of infrastructure for power supply also affects electricity costs. As the power supply network deteriorates, electricity becomes unstable, which can lead to higher maintenance costs and higher electricity bills. For example, Nigeria is the most populous country in Africa, but its power infrastructure is very poor. According to World Bank data, about half of Nigeria's population does not have an electricity connection, and even in large cities, power outages occur frequently. In addition, because the power supply is unstable, factories that require a stable power supply are forced to rely on self-generation. Self-generation generally uses diesel or gasoline generators, which have high operating costs, and even if the electricity bill is low, the cost of supplying electricity stably is high.
Imports and exports of electricity: Another factor is the import and export of electricity. In regions where it is easy to import and export electricity (for example, between EU countries), electricity prices can be kept low. On the other hand, in regions where it is difficult to import and export electricity, electricity prices can be high. In addition, the level of use of renewable energy, policies, and the strictness of environmental regulations also affect electricity costs.
Comparison of electricity prices in major countries
Source: GlobalPetrolPrices.com