Ohio's Electricity Future: Navigating Rising Costs and Policy Shifts (2025-2035)
Ohio's electricity market is on the cusp of a significant transformation, with a complex interplay of state-level policies, federal actions, and surging demand set to reshape costs over the next decade. Our new report, "Ohio Electricity Cost Projections: An Analysis of Market Dynamics and Policy Impacts," offers a detailed look into what consumers and businesses can expect from 2025 to 2035.
Immediate Challenges: 2025-2026
The immediate outlook points to an upward trend in electricity costs. This is primarily due to an 800% surge in PJM Interconnection's capacity costs and rising natural gas prices. These factors are projected to lead to an estimated 10-15% increase for residential customers. For instance, AEP Ohio's Price to Compare (PTC) for residential customers is expected to rise to approximately 9.97¢/kWh starting June 1, 2025. This period will also see the initial impact of federal clean energy tax credit eliminations, affecting residential solar and electric vehicle (EV) credits by the end of 2025.
Mid-Term Dynamics: 2027-2030
Ohio's House Bill 15 (HB 15), effective August 2025, aims to introduce measures to mitigate these rising costs. Key provisions include property tax reductions for new energy infrastructure, effective in 2027, and the elimination of coal subsidies. These initiatives are designed to stabilize or lower long-term electricity costs by promoting market-driven pricing and behind-the-meter generation.
However, federal policy changes could counteract these state-level efforts. The "One Big Beautiful Bill Act" (OBBB), signed into law on July 4, 2025, significantly rolls back many clean energy tax incentives. This could disincentivize clean energy deployment, potentially increasing reliance on more volatile fossil fuels. Under a "Project 2025" scenario, annual household costs could increase by an estimated $150 by 2030. PJM capacity costs are also expected to remain elevated through 2030.
Long-Term Trajectory: 2031-2035
Looking further ahead, a dramatic increase in electricity demand, largely from new data centers and advanced manufacturing facilities, will exert persistent upward pressure on prices. This necessitates significant investments in grid infrastructure and new generation capacity. The "Project 2025" scenario projects up to a $260 annual increase for residential customers by 2035 if federal clean energy cuts persist. The overall cost trajectory will depend heavily on the interplay between the benefits of HB 15 and the impacts of federal policy shifts and continued demand growth.
Estimated Ohio Electricity Costs - Cents per KWh (2025-2035)
The projected electricity costs for Ohio from 2025 to 2035 are expected to see increases across all sectors. Here's a breakdown of the percentage increases:
Residential Sector: Electricity costs for residential customers are projected to increase by approximately 15.82% at the low end and 18.92% at the high end from 2025 to 2035.
Commercial Sector: Commercial electricity costs are estimated to rise by about 19.35% (low end) to 24.03% (high end) over the same period.
Industrial Sector: The industrial sector is expected to experience the highest percentage increase, with projected rises ranging from 22.35% (low end) to 32.58% (high end) between 2025 and 2035.
These increases are influenced by factors such as the immediate impact of the PJM capacity auction, rising natural gas prices, and federal policy shifts, which may counteract state-level efforts like Ohio House Bill 15 to stabilize costs.
Key Takeaways for Ohioans
Ohio's electricity market is in a period of significant change. While state-level reforms aim to create a more competitive and affordable energy future, federal policy shifts and increasing demand will present ongoing challenges. Businesses and consumers are encouraged to monitor these developments closely and explore options to manage their energy consumption and costs.
For a comprehensive understanding of these projections and the factors influencing Ohio's electricity costs, access the full report here.
