Independent report reveals Commonwealth saw third-largest increase in electricity prices nationwide over the past five years, outpacing inflation; Study informs SI2 policy reforms to protect Pennsylvania ratepayers and mitigate future price shocks.
Rising natural gas prices and cost of building new power plants contributed to a 41% increase in Pennsylvania’s electricity prices from 2021 to 2025, according to a new analysis by The Brattle Group. Commissioned by the Solar and Storage Industries Institute (SI2), the report, Recent Electricity Price Trends and Drivers in Pennsylvania, finds that residential customers experienced a 40% overall increase in electricity prices during that period. Nearly one in five Pennsylvania households is now struggling to pay their electric bills, underscoring the growing affordability challenge facing the state.
“To address energy affordability in the Commonwealth, we first need to understand what is actually driving up costs,” said David Gahl, executive director of the Solar and Storage Industries Institute. “This study gives policymakers and the public a data-driven foundation to inform future energy decisions and protect the state’s ratepayers.”
The Brattle report finds that inflation and tariffs increased power plant construction costs across the energy sector, but solar generation experienced significantly smaller cost increases than natural gas. Capital costs for new natural gas generation increased between 40 and 44% over the study period, compared to 13% for solar.
“Contrary to some perceptions in the industry, renewable generation was not a primary driver of Pennsylvania’s retail electricity price increases over the five-year period analyzed for this study,” said Ryan Hledik, Principal at The Brattle Group. “Renewables currently represent a small share of the state’s generation mix, but these resources benefitted from a diverse pool of suppliers, technology improvements, and shorter construction timelines that kept labor and financing expenses down.”
In addition to lower construction costs, solar energy requires no fuel, which insulates ratepayers from fuel price volatility.
Beyond power generation, residential rates were further impacted by the rising cost of local grid infrastructure upgrades, driven by inflation impacting labor and material costs, as well as the higher cost of alternative energy credits, primarily from non-renewable sources like waste coal.
Data centers, renewable energy, and extreme weather were not found to be significant drivers of Pennsylvania rate hikes between 2021 and 2025. However, the report notes that wholesale capacity prices are scheduled to double in 2026, due in part to the projected growth of power demand from new data centers.
Based on Brattle’s findings, SI2 identified a set of policy recommendations to deliver immediate bill relief to Commonwealth ratepayers and mitigate future price hikes.
- Expand solar access by authorizingcommunity and portableplug-in solar so renters and homeowners can directly lower their monthly bills.
- Streamline interconnection by establishing firm utility study timelines, requiring near-real-time hosting capacity maps, and piloting flexible interconnection to maximize existing grid capacity.
- Establish an energy storage program that sets fair tariffs for home and business batteries to build a competitive market and strengthen grid resiliency.
- Enable virtual power plants by allowing residential storage and other distributed energy resources to act collectively as a single, large power plant during times of grid stress.
- Ensure solar system owners continue to receive full credit for the power they generate, and that future solar owners are fairly compensated for the value they provide to the grid.
- Reduce customer costs by requiring utilities to use lower-interest financing, plain-language justifications, and competitive bidding for new investments.
- Update the Alternative Energy Portfolio Standard by increasing in-state solar requirements with energy storage targets to diversify the electricity market.
“The Brattle analysis points to the value of diversifying Pennsylvania’s electricity portfolio,” said Gahl. “Expanding solar and energy storage can help cushion families from future price shocks while also strengthening grid reliability.”
The Brattle Group conducted this quantitative analysis using publicly available data from the Electricity Price Hub, the Federal Energy Regulatory Commission, and the U.S. Energy Information Administration between 2021 and 2025. The analysis evaluates historical trends and is not a forecast of future electricity prices.
Read full Brattle report here: https://www.ssii.org/wp-content/uploads/2026/07/PA-Electricity-Cost-Drivers-Final-Report.pdf
