Here’s a very bold idea on how electricity should be priced that I believe could completely change the world in several positive ways.

It would be the first, global, progressive pricing scheme that would give “life-line” like service to all in need of the freedom and convenience of basic electricity.  Second, it would, at the same time, provide the incentive for renewable energy to blossom, in an extremely fair and global way.

The idea is this – take the lowest possible electricity price anywhere on the planet, about $0.03 per kilolwatt hour, and offer that rate to everyone on the planet, for their first kilowatt hour (per month, per person).  For each doubling of usage, increase the rate $0.01.  So if you use 2 kilowatt hours per month, your rate is $0.04.  For 4 kilowatt hours per month, per person, your rate is $0.05.

On a blended average basis, rates would not rise for any consumers basic consumption.  Only for very large consumption would rates rise slightly.  However, the large consumption rise would allow a fast payback on renewable energy installations, and utilities would know a fixed rate that they could earn for expanding usage and demand, and this would allow much greater deployment.

If the entire world could both stabilize and articulate an increasing rate like this, then that knowledge and stability to providers would encourage tremendous innovation and investment to meet the need.  Right now, in many places of the world, electricity is subsidized to be so inexpensive (Governments fund this by taking a loss) that it’s impossible for renewable to compete.  The intent is to provide affordable power to lower-income, smaller users.  But with fixed pricing, renewable competition is eliminated.  Logarithmic pricing would fix this and allow both – affordable power and unsubsidized renewable competition.