2023 power and utilities industry outlook has been saved
2023 power and utilities industry outlook
Countering headwinds through innovation, investment, and industry convergence
In 2023, supply chain snags, rising costs, and extreme weather are likely to continue plaguing the power and utilities sector. But promising trends in innovation and investment, buoyed by recent legislation, can help the sector fulfill its mission to provide increasingly secure, reliable, clean, and affordable electricity. Our 2023 outlook examines the latest power and utilities industry trends to help your company tap opportunities across the entire clean energy economy.
Electric power sector weighs promising trends amid cost and climate woes
2022 was a year of perils and promise for the electric power sector. US electricity sales continued to rise as the pandemic recovery progressed, increasing 3.6% in the first eight months compared to the prior year.1 But costs also spiked, largely due to natural gas prices more than doubling on global shortages exacerbated by Russia’s invasion of Ukraine. Extreme climate events—from droughts to hurricanes, heat waves and wildfires—continued to test regional grid resilience.2 In response, the industry and policymakers worked to bolster reserves, deploy energy storage and microgrids, harden infrastructure, and strengthen flexible load options.3
In 2023, these promising developments will likely evolve further. But providing secure, reliable, affordable, and clean electricity could become even more challenging. Inflation, high fuel costs, and supply chain snarls may keep electricity prices elevated, while extreme weather, cybersecurity threats, and the growth of variable renewables and distributed energy resources may continue to require innovative management to ensure grid reliability. Despite these challenges, new technologies and supportive policies could ripen opportunities in 2023 and help the industry achieve its goals. Explore the five trends that will likely influence the direction of the industry over the next 12 months.
Five power and utilities industry trends to watch
1US Energy Information Administration (EIA), Electric Power Monthly, Table 5.1, “Sales of electricity to ultimate customers,” All sectors, October 25, 2022.
2Boratha Tan, “Facing extreme weather, states explore ways to improve energy resilience,” National Conference of State Legislatures, October 12, 2022.
4Steven Rogers et al., Enabling the clean energy transition: Planning for next-generation advanced metering infrastructure and grid technologies, Deloitte, November 1, 2022.
6US Securities and Exchange Commission (SEC), “SEC proposes rules to enhance and standardize climate-related disclosures for investors,” press release, March 21, 2022.
7Jael Holzman and David Iaconangelo, “US shift on child labor may scramble EV sector,” E&E News, October 5, 2022.
8Matt McFarland, “The next holy grail for EVs: Batteries free of nickel and cobalt,” CNN Business, June 1, 2022.
9Emma Penrod, “Growing scale, Inflation Reduction Act subsidies could push green hydrogen prices negative: RE+ panel,” Utility Dive, September 27, 2022.
10Dan Esposito and Hadley Tallackson, “The Inflation Reduction Act upends hydrogen economics with opportunities, pitfalls,” Utility Dive, September 30, 2022.
11Anne C. Mulkern, “Climate bill, state mandates jump-start EVs’ future,” E&E News, August 18, 2022.
12Jane Nakano, “IRA and the EV tax credits—can we kill multiple birds with one stone?,” Center for Strategic & International Studies (CSIS), September 15, 2022.
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