Why The Cost Of Electricity Is Astronomically High In Some Countries

Why The Cost Of Electricity Is Astronomically High In Some Countries

The prices of most things tend to be comparable all over the world. There are, of course, the small differences occasioned by the differences in the factors of production between the different countries. But the overall figures tend to be comparable so that the price of a pound of sugar in the United States could be twice as high as the price of the same pound of sugar in some Asian country. The difference here is substantial (100%), but the two prices are still comparable. As it turns out, though, there are some products where you can have what can only be termed as astronomical price differences. Electricity happens to be one such product (where what we are talking about is the mains electricity, drawn from the national grid). Here, we have a situation where a kilowatt-hour of electricity can cost ten times as much in one country, when compared to what it costs in another country. This is a 1,000% price difference - and astronomical is the only term that can competently describe it.

All that brings us to the question as to why the cost of electricity can be astronomically high in some countries, compared to what it costs in others.

And as it turns out, when electricity costs are astronomically high, a number of factors tend to be at play.

The countries that have high costs of electricity tend to be nations that rely on inefficient methods for producing electricity. Some methods for producing electricity are more efficient (at least from a costing point of view) than others. You can't even start comparing the cost of producing electricity using diesel-powered generators to the cost of producing electricity from a nuclear reactor. True, it is expensive to set up the nuclear reactor, but one it is up and running, the cost of production tends to be almost negligible. Hydro-electric power production is even cheaper to set up, and cheaper to keep running, provided there is a good flow of water. The tragedy here is that there are some countries that are in a situation where they have to depend on diesel powered generators for their national grids. Consequently, it comes as no surprise when the cost of electricity in such countries turns out to be ten times as high as the cost of electricity in the countries wholly using nuclear or hydro-electric systems.

Often, deeper political reasons are to be found, behind the astronomically high costs of electricity in some countries. We are looking at the situations where high level corruption leads to embezzlement of the funds that would have gone to the development of proper electricity production systems. The end result is a situation where a nation has to depend on a power production system that is cheaper to set up but costly to keep running like the diesel-powered system.

Sometimes, there are vested economic interests behind the high cost of electricity. It could be a situation where a country is able to produce power for its national grid cheaply, but where some big shots' insist on keeping it expensive; with the extra money going to line their pockets.

Sometimes, we have genuine national poverty leading to the high costs of electricity. This is the situation in some countries that are simply too poor to set up their own power generating capacities. So they are forced to import power, and they end up being fleeced in the process - by the countries that export electricity to them.

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