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Median electricity prices for U.S. industrial plants are one-third to one-half of prices in China, and the savings in the U.S. can be as high as 70 percent, according to “A Comparison of U.S. & China Electricity Costs.”
A first “apples to apples” comparison of industry electric costs in both countries was released by Biggins Lacy Shapiro & Co. (BLS & Co.) and Tractus Asia.
“A search for lower costs had led many manufacturers to set up operations in China starting in the early 1990’s,” said Tim Comerford, Senior Vice President — Energy Services, BLS & Co. “However, the costs of production are constantly evolving. To our surprise, we found China’s electricity prices rose much faster than those in the U.S. over the last ten years, growing 17.5 percent versus 11.9 percent in the U.S.”
The report shows that median electricity prices for industrial plants in the U.S. tend to be 34-49 percent lower than Chinese prices. In some regional comparisons – specifically the South Central U.S. versus Jiangsu, China — savings can be as high as 70 percent.
“Unlike other costs that can be offset somewhat by scale economies, China’s higher electricity costs are not one of them, and the cost differential is likely to remain large — barring a major devaluation of the renminbi,” said Dennis Meseroll, Executive Director, Tractus Asia.
Conversely, electric prices in the U.S. have been stable or have seen downward pressure over the past two years. “The U.S. has experienced a significant increase in the supply of natural gas, and as a result, near record low natural gas prices. Many utilities are converting or shutting down coal generating facilities in favor of combined cycle natural gas plants,” said Comerford.
To compile the data, BLS & Co. worked directly with U.S. utilities, and Tractus Asia consulted with authorities from China’s State Grid Corp.