Why Are Energy Prices Going Up In 2022

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Energy prices across the globe have gone up in 2022, and so far, there is no sign of it going in the other direction. There are several reasons that you are seeing this increase, which will be covered in a second. First, you must understand how the energy gets to you and what it must go through to get there. Let’s take a quick look at the process.

How Electricity Gets To Your Home

It is not by magic that you get electricity to your home daily. In fact, it is a complicated system that takes many steps, and it must go through a couple of companies before reaching you. If these steps were not accepted, you would be cooking over a fire and using candles as your lights.

  • Power Stations – These are the locations that actually turn materials and sources into power. Most of them burn coal and create combustion to create electricity. In contrast, others use as many renewable resources as possible and supplement with the combustion process. 
  • Transformers – The electricity that has been created goes through high voltage lines to the transformers. They add voltage to the electricity so it can be pushed through the lines across the country.
  • Substations – The power goes through another set of high voltage power lines to a substation, where the power is toned down to a usable voltage. If it did not get converted to the grid, you would not have the power you could use in your home.
  • Home – The electricity is sent out into the power lines you see alongside the road to your home’s power box. 

That is the simplified process of how power is created and delivered to you. 

Why Prices Are Going Up

Now that you understand how electricity gets to your house, you will better understand why energy prices are rising. Several reasons will be discussed, which all combine in a tiny ball to gain more money out of your own pocket. Remember that not all the producers and suppliers will jack their prices up, so you need to check around online at the iSelect electricity in Melbourne platform to check prices.

  • War – The war in Ukraine affects the entire world’s power supply. You may think that war that far from you would not have anything to do with you. Much of the world’s natural resources used to create fuel were exported from Russia. Since most countries have banned exporting or importing into Russia, the world finds itself in the middle of an energy crisis.
  • Exporting Too Much – The last government in place chose to let the power stations export a large amount of the power they created. This is great for power companies because they increase their profits by a substantial amount, but it makes a country that is low on energy. This increases the prices they are billed because the companies supplying it to them that get it from the producers are charged the going rate of the out-of-country locations they are pushing power to.
  • Demand – The demand for electricity throughout the nation has increased, meaning the producers and sellers need access to more power. Demand always increases prices, so this is not a fact that should surprise you. 

Final Thoughts On Why Electricity Prices Are Increasing In 2022

The unfortunate fact of life is that prices will go up as we all travel into the future. Not just electricity, but everything that is service or product based. Inflation and economic factors have an impact on the market. 

As prices go up for the producers of the power that you need, you can expect the increases to be handed down the line until it gets to you. It is not a great thing for you, and there is not anything that you can do about it. But you can support the companies trying to keep prices down by using their services over the others. 

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