This article will list countries with low electricity costs and discuss their power grids. If you want to skip our analysis of these countries’ electricity generation and consumption patterns, read 5 Countries With the Cheapest Electricity in the World.
Technological advancement and consumer demand are reshaping the global electricity market, which is currently valued at over $1.94 trillion and projected to reach $3.9 trillion by 2032, growing at a CAGR of 8.04%, as noted by Precedence Research. The growth is driven by increasing electricity demand, which will see a 3.3% year-on-year increase by 2024 due to population growth and economic development, with the industrial, residential, and commercial sectors as the primary consumers. The Energy Information Association anticipates a 50% rise in global energy requirements by 2050, with residential electricity consumption expected to see the highest growth. The trend underscores the need for advanced electricity supply chains and a focus on self-sufficiency in electricity generation and distribution.
Countries with cheap electricity enjoy this perk owing to factors like geographical location, natural resource availability, and technological development. A country’s electricity generation mix is crucial in determining its population’s electricity costs. In countries with abundant natural resources like hydroelectric, solar, or wind power, electricity tends to be more affordable. For example, Canada and Norway, where hydroelectricity is a dominant energy source, have some of the lowest household electricity prices among OECD countries. Canada generates 60% of its electricity from hydro sources, supplemented by nuclear and gas power plants. Norway, meanwhile, sources approximately 93% of its electricity from hydro resources.
Control over energy sources also affects electricity costs. Countries with consistent gas supplies, such as Canada and Israel, exercise greater control over prices. In contrast, those reliant on imported fuels, like the UK with its significant gas imports, face higher costs. The proportion of renewable sources in the energy mix is another critical factor. A higher proportion of renewables, such as wind and solar, can result in lower electricity bills since they are generally cheaper than nuclear power, which is among the most expensive sources and often plagued by delays and cost overruns.
Also Read: 20 Countries With Highest Cost Of Electricity
The Electricity Sector is Increasingly Moving Away from Coal
The electricity sector is increasingly moving away from coal, which has significantly contributed to climate change issues like global warming due to its emission of greenhouse gases and other pollutants. Consequently, countries worldwide are striving to reduce coal usage despite its historical status as the most economical energy source for power plants.
Significantly, major electricity companies are shifting their focus, investing in renewable energy projects such as wind farms and solar panel fields rather than depending on coal. The change isn’t just good for the environment, but it also makes economic sense. Renewable energy is becoming more affordable, and unlike coal, it doesn’t have the problem of price fluctuations.
It’s noteworthy that in 2010, clean energy options like solar panels were perceived as prohibitively expensive, costing 710% more than traditional fuel-based solutions. However, the International Renewable Energy Agency (IRENA) reports that solar photovoltaics (PVs) are now about 29% less expensive than the cheapest fossil fuel-fired alternatives, offering substantial consumer benefits, although infrastructure and installation costs for these sources remain a debate.
As part of its move away from coal, AES Corporation (NYSE:AES), a Fortune 500 global energy company, has committed to discontinuing coal usage by 2025, with efforts already in progress. For example, Reuters reported that AES Corporation (NYSE:AES) is planning to sell its stake in the Mong Duong 2 coal-fired power plant in Vietnam as part of its strategy to divest from coal assets. As a major US investor in Vietnam, primarily in the coal power sector, AES Corporation is now shifting to build a liquefied natural gas (LNG) and gas-fired plant in the country while negotiating the sale of its Mong Duong 2 stake.
Moreover, AES Corporation (NYSE:AES) has recently finalized a deal to terminate the contract for its Warrior Run coal-powered plant in Maryland, which produces 205 megawatts of energy. As reported by PR Newswire, Potomac Edison, a subsidiary of FirstEnergy Corp. (NYSE:FE), has been the recipient of electricity from this plant since 2000 and was contracted to continue until 2030. However, following AES’s announcement, Potomac Edison, a part of FirstEnergy Corp. (NYSE:FE), also consented to the termination, agreeing to a buyout of its contract with AES seven years ahead of schedule in exchange for $357 million.
This agreement got a green light from the Maryland Public Service Commission in June 2023 and is projected to save Potomac Edison’s customers about $80 million over the next seven years. The cessation of operations at the Warrior Run coal-power plant by May 2024 will further assist the State of Maryland, which is among the states with the most expensive electricity in the US, in its efforts to lower carbon emissions. Notably, FirstEnergy Corp. (NYSE:FE) has stated that the early termination of the power purchase agreement between the two entities is likely to result in approximately 90% savings for customers over the remaining duration of the agreement.
Also Read: 20 States That Have The Cheapest Electricity In The US
Let’s now talk about countries with affordable energy costs!
20 Countries With the Cheapest Electricity in the World
Our Methodology
To identify the countries with the lowest electricity costs in 2023, we consulted the cost chart on GlobalPetrolPrices. These countries were subsequently ranked in descending order based on their electricity prices as of November 2023.
Based on the reports, here are the top countries with affordable electricity:
20. Myanmar
Electricity Cost in Cents per Kilowatt-Hour (kWh): 2.9
Myanmar is one of the countries with affordable electricity, owing to its numerous rivers and high rainfall that enables low-cost hydroelectric power generation. However, despite low prices, the country faces challenges in consistent electricity supply and infrastructure. The power grid in Myanmar weakened after foreign companies, including Chevron Corp (NYSE:CVX), began withdrawing following the military coup in 2021.
Chevron Corp (NYSE:CVX) condemned the human rights violations in Myanmar and, in February 2023, announced plans to sell its 41.1% stake in Myanmar’s Yadana offshore project to Canada’s MTI Energy. However, Chevron Corp (NYSE:CVX) still owns its stake in the Yadana gas field and its timeline to complete the sale remains unclear. The power grid faced further challenges following the suspension of two large liquified natural gas (LNG)-to-power plants in Yangon in 2021. This suspension reduced Myanmar’s electricity generation capacity by over 2.5 gigawatts. Additionally, over 2 gigawatts of planned natural gas-based plants involving foreign investment are currently on hold, which could otherwise improve the power grid.
19. Laos
Electricity Cost in Cents per Kilowatt-Hour (kWh): 2.9
Laos, located in the lower Mekong Basin – accounting for 35% of the Mekong’s total inflows – has become a major hydroelectric power producer due to its geographic advantages. The country’s current hydropower capacity is 9.6 gigawatts, with the potential to increase to 23 gigawatts, according to government estimates. Laos aims to generate 30% of its energy from renewable sources by 2025. The government’s goal to become the “battery of Southeast Asia” has spurred significant developments in this sector.
18. Kuwait
Electricity Cost in Cents per Kilowatt-Hour (kWh): 2.9
Electricity in Kuwait, one of the top oil-producing countries, is affordable primarily because of the country’s rich oil and natural gas resources. Kuwait is also advancing in renewable energy, with the New Kuwait 2035 plan targeting 15% of its power generation from renewables by 2030. The target is significant as Kuwait’s electricity demand is projected to reach around 30,000 MW by 2030. Kuwait’s oil minister, Saad Al Barrak, recently informed the UAE’s state news agency (WAM) that the country plans to invest over $300 billion in its energy sector by 2040, further bolstering its energy independence.
17. Egypt
Electricity Cost in Cents per Kilowatt-Hour (kWh): 2.9
Egypt experienced its worst energy crisis between 2009 and 2013 due to high consumption, low production, and difficulties in securing international loans. However, the power grid began to recover in 2014 under the new government’s initiatives. The recovery is largely attributed to fossil fuel power plants, with gas and coal plants generating approximately 85% of the country’s electricity. This led to an increase in power generation, reaching 265 terawatt-hours in 2023, up from 231.5 terawatt-hours in 2020, and created a surplus despite rising domestic demand.
16. Oman
Electricity Cost in Cents per Kilowatt-Hour (kWh): 2.6
Oman is among the countries with the cheapest electricity in the world due to the abundant domestic natural gas used for power generation and cost-reflective tariffs. Approximately one-quarter of Oman’s domestic natural gas production is utilized for electricity generation and water desalination. The government’s introduction of a new tariff system in 2017, reflecting actual supply costs and varying by peak hours and season, has been critical.
Prompted by low crude oil prices and a need to reduce subsidies, this reform is estimated to save the government up to US$260 million annually. The move towards market-reflective pricing has enhanced the economic sustainability of electricity generation. According to the International Renewable Energy Agency, 98% of Oman’s energy generation comes from non-renewable sources and 2% from renewable sources. The National Energy Strategy 2040, however, targets that at least 10% of electricity generation will be from renewable resources.
15. Argentina
Electricity Cost in Cents per Kilowatt-Hour (kWh): 2.5
Argentina is also among countries with low electricity rates mainly because of the notable role of hydroelectric power in its energy mix. In 2023, the country experienced a surge in hydroelectric power generation, achieving its highest monthly total in over five years in September. This increase was primarily attributed to heavy rains during the southern hemisphere winter, which raised water levels in key river basins.
Hydroelectric power generation through September reached 28 terawatt hours (TWh), a 36% increase from the same period in 2022. Such abundance of hydroelectric power decreased the country’s reliance on fossil fuels and raised the share of clean power in electricity generation to a record 59% in September 2023, up from 45% in the previous year. Additionally, the country’s coal-fired power generation also decreased this year, dropping by 42% to 1.3 TWh from 2.3 TWh in the January to September period of 2022.
14. Nigeria
Electricity Cost in Cents per Kilowatt-Hour (kWh): 2.5
Electricity in Nigeria is relatively inexpensive, primarily due to substantial federal government subsidies. The country relies mainly on thermal and hydropower sources for electricity generation, which are highly subsidized, contributing to the low cost. About 86% of its electricity is generated from fossil fuels, especially gas, with the remainder coming from hydropower. Nigeria has 23 power-generating plants with a capacity of 19,396 MW, which is insufficient to meet the needs of households and businesses. Consequently, Nigeria has a low per capita electricity consumption.
13. Zambia
Electricity Cost in Cents per Kilowatt-Hour (kWh): 2.4
Zambia ranks among the countries with the cheapest electricity in the world, thanks to its substantial investment in hydroelectric power, which comprises the majority of its electricity generation. The country’s geography, with significant water resources from rivers like the Zambezi, Kafue, and Luangwa, is conducive to hydroelectric power.
Key facilities such as the Kariba Dam and Kafue Gorge Upper Power Station contribute to this hydro-powered generation. Hydroelectric power, typically cheaper to produce once the infrastructure is established, does not require fuel and has low operational costs. Additionally, Zambia’s participation in the Southern African Power Pool facilitates efficient electricity sharing and distribution across the region, enhancing cost-effectiveness. However, it’s crucial to note Zambia’s vulnerability to electricity shortages during periods of drought due to its reliance on hydroelectric power.
12. Uzbekistan
Electricity Cost in Cents per Kilowatt-Hour (kWh): 2.4
Uzbekistan’s electricity generation is mainly powered by its significant natural gas reserves. The abundant domestic supply of natural gas fuels about 85% of the country’s electricity, offering a lower cost compared to countries dependent on imported fuels. Notably, Uzbekistan recently began receiving natural gas from Russia via Kazakhstan. Under the two-year agreement between Uzbekistan and Russia’s state gas company Gazprom, the latter will supply 9 million cubic meters of gas daily until the deal’s expiry.
11. Suriname
Electricity Cost in Cents per Kilowatt-Hour (kWh): 1.6
Located in the northeastern part of South America, Suriname has a coastline along the Atlantic Ocean. Its tropical climate and high rainfall are conducive to hydroelectric power, as consistent and abundant rainfall ensures a steady water flow into rivers and reservoirs. The Brokopondo Reservoir, one of the largest in the world, is central to Suriname’s electricity generation. It provides a significant portion of the country’s power through the Afobaka Hydroelectric Plant. As with other hydroelectric facilities, the plant generally incurs lower costs once the infrastructure is in place, as it does not require fuel and has low operating expenses.
10. Iraq
Electricity Cost in Cents per Kilowatt-Hour (kWh): 1.5
Iraq is among the countries with the largest oil reserves heading into 2024, so its electricity generation continues to be cheaper as the revenue generated from oil sales significantly subsidizes these costs. Also, the abundance of oil means that a large portion of Iraq’s thermal power plants use oil as the primary fuel source. Additionally, the Iraqi government has historically kept electricity prices low as a social welfare measure.
9. Zimbabwe
Electricity Cost in Cents per Kilowatt-Hour (kWh): 1.5
Like many other countries with affordable electricity, Zimbabwe’s investment in hydroelectric power has paid off. Its Kariba Dam, shared with Zambia, ranks among the world’s largest hydroelectric power stations. Zimbabwe is also exploring renewable energy sources like solar to diversify its energy mix. Despite affordable electricity, the country faces challenges in balancing demand and supply. Aiming to double its electricity output by 2025, Zimbabwe’s current power generation capacity stands at 2000 megawatts. However, due to water shortages and infrastructural constraints, it can only produce 1400 megawatts. This expansion is crucial as the country’s mining sector grows and the demand for power increases.
Also Read: 20 Most Valuable Mining Companies in the World
8. Bhutan
Electricity Cost in Cents per Kilowatt-Hour (kWh): 1.5
Bhutan, a landlocked developing country, has a mountainous terrain and numerous rivers that make it an ideal location for hydroelectric power plants. The country produces more electricity than it consumes, exporting about 75.5% of its surplus, mainly to India. This export is a significant revenue source, helping subsidize domestic electricity costs. Bhutan’s focus on hydropower aligns with its commitment to environmental conservation and sustainability. Notably, Bhutan plans to add 300 to 400 megawatts of solar energy generation capacity to its grid within the next 2-3 years.
7. Angola
Electricity Cost in Cents per Kilowatt-Hour (kWh): 1.4
Angola’s location on the Western Atlantic coast provides it with abundant hydrological resources. Major hydroelectric projects like the Laúca and Cambambe dams significantly contribute to its power generation capacity. These hydroelectric facilities offer a sustainable, low-cost energy source, reducing reliance on expensive fossil fuels.
6. Kyrgyzstan
Electricity Cost in Cents per Kilowatt-Hour (kWh): 1
Kyrgyzstan’s abundant water resources, particularly from the Naryn River, support several major hydroelectric stations, including the Toktogul Reservoir, the largest in Central Asia. The country’s electricity infrastructure, established during the Soviet era, promotes efficient production and distribution of hydroelectric power. A recent development involves a deal between UAE’s renewable energy company, Masdar, and Kyrgyzstan’s energy ministry to develop clean energy projects. These projects are expected to add 1 gigawatt of electricity to the national grid. The first of these, a solar PV plant with a capacity of 200 megawatts, is scheduled to begin operations in 2026.
Click to continue reading 5 Countries With the Cheapest Electricity in the World.
Suggested Articles:
- 20 Countries with the Cheapest Gas Prices
- 15 Countries That Care About The Environment Most
- 15 Countries That Contribute The Most To Climate Change
Disclosure: None. 20 Countries With the Cheapest Electricity in the World is originally published at Insider Monkey.