德勤：2023 年电力和公用事业行业展望 2023 power and utilities industry outlook

2023powerandutilities

industryoutlook

Contents

Electricpowersectorweighspromisingtrendsamidcostandclimatewoes

Trendstowatch

1.Gridmodernization

Utilitiesincreasinglyplantorolloutthenextwaveofadvancedmeteringinfrastructure

2.ESGreporting

Environmental,social,andgovernancereportingcontinuestogainmomentum

3.Gridflexibility

Batterystoragedeploymentssettoacceleratedespitesupplychainsnags

4.Decarbonizedfuels

Powerandutilitycompaniesseeopportunitiestoreapvaluefromcleanhydrogen

5.Transportationelectrification

Utilitieslikelytosharpenfocusonpreparingforelectricvehiclegrowth

Innovation,investment,andindustryconvergencecouldcounterheadwinds

Let’stalk

3

4

5

6

7

8

9

10

AbouttheDeloittesurvey

TounderstandtheoutlookandperspectivesoforganizationsacrosstheUSpowerandutilitiesindustry,Deloittefieldedasurveyofmorethan70USexecutivesandotherseniorleadersinSeptemberandOctober2022.Thesurveycapturedinsightsfromrespondentsinelectricitygeneration,transmission,anddistribution.

2023powerandutilitiesindustryoutlook2

Electricpowersectorweighspromisingtrendsamidcostandclimatewoes

2022wasayearofperilsandpromisefortheelectricpowersector.USelectricitysalescontinuedtoriseasthepandemicrecoveryprogressed,increasing3.6%inthefirsteightmonthscomparedtotheprioryear.1Butcostsalsospiked,largelyduetonaturalgaspricesmorethandoublingonglobalshortagesexacerbatedbyRussia’sinvasionofUkraine.Coalpricesalsoroseasdemandsurgedforalternativestogas,2whilerenewableenergypricesfollowedsuitduetosupplychaindisruption,inflation,andrisinginterestrates.3Asaresult,USretailelectricitypricesreachedrecordhighsin2022,averaging12.3centsperkilowatthour(cts/kWh)acrossallsegments(commercial,industrial,residential)inthefirsteightmonths,up11%yearoveryear.4Andthey’reexpectedtoremainelevatedinto2023.

Extremeclimateevents—fromdroughtstohurricanes,heatwavesandwildfires—continuedtotestregionalgridresilience.5Inresponse,theindustryandpolicymakersworkedtobolsterreserves,deployenergystorageandmicrogrids,hardeninfrastructure,andstrengthenflexibleloadoptions.6Thepowersectoralsoboostedeffortstothwartincreasinglysophisticatedcybersecuritythreats.7

Atthesametime,2022broughtseveralpromisingdevelopmentsthatwilllikelycarryforwardinto

2023:

•USrenewablegenerationandcapacityrose,accountingforover23%ofelectricitygeneratedfromJanuarythroughAugust2022,upfromabout21%inthesameperiodof2021.8Solarandwindpoweraccountedfor69%ofnewutility-scalecapacityadditionsfromJanuarytoAugust2022.9

•TheInflationReductionAct(IRA)extendedandexpandedtaxcreditsforrenewables,electricvehicles,stand-alonestorage,greenhydrogen,cleanenergymanufacturedcomponents,andmore.10

•Fundsbegantoflowfromthe$1.2trillionInfrastructureInvestmentandJobsAct(IIJA),alsoknownastheBipartisanInfrastructureLaw,tosupportgridmodernizationandcleanenergyresearchanddeployment.11

•Regionaltransmissionorganizationssubmittedinitialplansfordistributedenergyresources(DER)toparticipateinwholesalemarketsunderFederalEnergyRegulatoryCommissionOrder2222.12

•USelectricvehiclesalesmayhaveapproachedatippingpoint,risingto6.3%oflight-dutyvehiclesalesinH12022.13

In2023,thesepromisingdevelopmentswilllikelyevolvefurther.Butprovidingsecure,reliable,affordable,andcleanelectricitycouldbecomeevenmorechallenging.Inflation,highfuelcosts,andsupplychainsnarlsmaykeepelectricitypriceselevated,whileextremeweather,cybersecuritythreats,andthegrowthofvariablerenewablesandDERmaycontinuetorequireinnovativemanagementtoensuregridreliability.The47largestUSelectricandgasutilitiesplantospendarecord-breaking$169.4billionin2023toenhancereliability,security,andrenewableintegration.14Butascustomersstrugglewithbillincreases,affordabilitycouldbecomeelusive.

Despitethesechallenges,newtechnologiesandsupportivepoliciescouldripenopportunitiesin2023andhelptheindustryachieveitsgoals.Weexploreseveralofthesepromisingtrendsandtheirpotentialimpactontheindustryinthisyear’soutlook,aswellaswhat2023mayholdforenvironmental,social,andgovernance(ESG)disclosures.

2023powerandutilitiesindustryoutlook3

1

Gridmodernization

Utilitiesincreasinglyplantorolloutthenextwaveofadvancedmeteringinfrastructure(AMI)

Manyofthemorethan115million“smart”electricitymetersdeployedatUScustomersitessince2000arebeginningtoshowtheirage,andutilitiesareincreasinglydevelopingreplacementplans.15Aftera15–20yearlifespan,batteriesarewearingoutandsomeneedtobereplaced.Thisfirstgenerationofdigitalelectricitymetersdisplacedmechanicalmetersand,forthefirsttime,enabledutilitiestoremotelyreadtheirentirepopulationofmetersindaily,hourly,oreven15-minuteintervals.16Utilitiescouldremotelyreceivepowerqualityinformation,switchpoweronandoff,anddetectpoweroutagesimmediately.

Smartmetershavesavedutilitiessignificanttimeandmoneyandenabledcarbonemissionsreductionthroughfewertruckrollstoread,activate,anddeactivatemeters.Oneanalysisfoundthatoperationalsavingsfordeploymentsgreaterthan500,000metersaveraged$10permeterperyear,recovering65%to75%oftheinitialcostofthemeterdeploymentprogramover20years.17Utilitybenefitscamelargelyfromreducingmeterreaders,

deferringgenerationinvestment,detectingtheft,andimplementingconservationvoltagereduction(CVR).18Someconsumersbenefittedfromonlinemove-in/move-outscheduling,outagerestorationtimenotifications,dynamicpricingplans,andbillforecastingalerts.

Thefirstwaveofsmartmetershadalifeexpectancyofapproximately20years,whichappearsroughlyaccuratebasedoninterviewswithAMI1.0-enabledutilities.19AsAMIsystemsapproachthatage,someutilitieswillstartplanningtheirreplacementin2023,asalargereplacementprojectcantakethreetofiveyearstoplanandsupplychainkinkscoulddelayitfurther.Utilitycompaniestypicallyreplacetheentiremeterratherthanjustthebatteriesbecausemanymetersaresealedorrequiredisassembly,makingbattery-onlyreplacementimpractical.20And,justasfirst-waveAMIbenefitshelpedpayforimplementation,thebenefitsofnext-genAMI(orAMI2.0)couldalsohelpjustifytherolloutexpense.

AMI2.0featuresfasterprocessors,morememory,modularcommunicationcapabilities,andlonger-lastingbatteries.21Residentialmetersarebecomingedgecomputingdevicesthatcanbetterunderstandhowelectricityisbeingusedorgeneratedbehindthemeter.Andthatcouldbeincreasinglyimportantasconsumersaddsolarpanels,electricvehicles,orbatterystorageandseektointeractwiththegrid.Fifty-threepercentofoursurveyrespondentssaidthemostimportantcapabilityAMI2.0couldprovidewouldbetosupportutilityflexibleloadprogramswithreal-time,devicelevelusageanalysis.Figure1highlightsthewidevarietyofcapabilitiesanticipatedfromAMI2.0.

Figure1.AnticipatedcapabilitiesfromAMI2.0-enabled

meters

Enhanced

cybersecurity

Edge

computing

Demand

Reliability

response

Cloud,

Efficient

battery

microgrid,and

intelligent

automation

DER

enablement

Distributed

intelligence

Customer

engagement

Smartgrid

enablement

Communications

network

Source:Deloitteanalysis.Foramorein-depthanalysis,see

Enablingthecleanenergy

transition:Planningfornext-generationadvancedmeteringinfrastructureandgrid

technologies

.

2023powerandutilitiesindustryoutlook4

s

s

e

n

i

s

u

b

n

o

s

t

c

a

p

m

I

l

a

t

i

p

a

c

l

a

i

c

o

S

s

r

o

t

a

l

u

t

g

n

e

e

m

R

n

o

r

i

v

n

E

s

O

G

N

S

s

r

o

t

s

e

n

v

o

i

n

t

a

I

v

o

n

n

i

d

n

a

l

s

e

r

d

e

o

i

l

m

p

s

p

s

u

e

C

o

m

m

u

n

i

t

y

e

r

s

C

u

s

t

o

m

E

m

p

l

o

y

e

e

s

H

u

m

L

e

a

d

e

r

S

s

h

I

h

i

m

p

a

p

r

a

a

c

e

n

t

s

d

h

o

g

n

o

o

b

l

v

u

d

s

e

i

e

r

n

n

e

r

s

s

a

s

nce

Busin

Corporate

purpose

ancapital

2

ESGreporting

Environmental,social,andgovernancereportingcontinuestogainmomentum

ManyUSpowerandutilitycompanieshavebeendisclosingelementsofESGtopicsformorethanadecadeandenhancingthemasneedsandadvocacyevolve.ProposedrulesbytheUSSecuritiesandExchangeCommission(SEC)couldprovidefurthermomentumin2023.

Currently,mostutilitiespostESGreportsandothersustainabilityactivitiesontheirwebsites.Formany,it’stheirversionofacomprehensiveSustainabilityReportorCorporateResponsibilityReport,whichincludesallaspectsofESG,notjustenvironmentalandclimate.22Thesereportstendtodescribeactivitiesofthecompany,aspirationalcommitmentsmade,andprogresstowardidentifiedESGmetrics.Reportingoftenincludeselementsofthecompany’scompliancewithframeworkssuchastheGreenhouseGasProtocol,theTaskForceonClimate-relatedFinancialDisclosures(TCFD),theSustainabilityAccountingStandardsBoard(SASB),andtheGlobalReportingInitiative(GRI).23NearlyallutilitiespopulateanESGtemplatedevelopedbytheEdisonElectricInstituteandtheAmericanGasAssociationandtheirmembercompaniesspecificallyforpowerandgasutilities,andincludeitinreportsorpostitontheirwebsites.24ManyalsosubmitdisclosuresthroughtheCarbonDisclosureProject(CDP)portal.25

EnhancedESGreportinganddecarbonizationcommitmentswilllikelyprogressfurtherin2023,ascompaniesseeagrowingneedtoidentifyrapidlychangingenvironmentalandsocietaldisruptersandaddressthem.Mountingcallsformoredisclosuresonhowthecompaniesarepreparedtodealwithdisruptersareanotherdriver.Figure2illustrateshowESGisanintegralpartofbusinessplanning.

Formostlargepowercompanies,thereportsoutlinetheircarbonemissionsreductiongoalsandplanstoachievethem.AsofOctober2022,43ofthe45largestinvestor-ownedutilitieshadcommittedtoreducingcarbonemissions.26Eachyearmorecompaniesannouncetargetsorstrengthenexistingtargets.Regulators,investors,customers,andotherstakeholderscontinuetourgemorecomprehensive,consistent,andstandardizedESGreporting.AndreportssuggestthatfavorableESGratingscanboostacompany’saccesstosustainability-linkedfinancing,suchasgreenbonds,andlowertheircostofcapital.27

Currently,UScompanydisclosuresandmetricsarenotuniformandthird-partyrevieworassuranceisnotwidespread.Butthatcouldbegintochangein2023,astheSECproposedanewruleinMarch2022thatwouldrequirepubliccompaniestoannuallydisclosecertainclimate-relatedfinancialstatementmetrics,informationrelatedtoclimate-relatedrisks,andgreenhousegas(GHG)emissionsinpublicdisclosurefilings.28ThisproposedSECrulefollowedanotherthatwouldrequireenhanceddisclosuresoncybersecurityincidents,risk,management,strategy,andgovernance.29Dependingonwhetherandwhentheproposedclimateruleisfinalized,itcouldbegintobephasedinasearlyasfiscalyear2023.30

Figure2.ESGisincreasinglyintegraltobusinessplanning

Source:Deloitteanalysis.

2023powerandutilitiesindustryoutlook5

3

Gridflexibility

Batterystoragedeploymentssettoacceleratedespitesupplychainsnags

USbatterystorageispoisedforfastergrowthin2023,asrenewables’shareofgenerationrises,extremeweathereventsbecomemorefrequent,andnewlegislationcontinuestoimproveitsvalueproposition.Attheendof2021,theUnitedStateshadacumulativetotalof4.6gigawatts(GW)ofutility-scalebatterystoragecapacity.31InH12022,theindustryaddedanother1.9GW,or

5gigawatthours(GWh),ofcapacity,despitepriceincreasesandprojectdelaysamidongoingsupplychainstruggles.Another4GWisexpectedtobeoperationalbytheendof2022,bringingtotal2022additionstonearly6GW,almostdouble2021installations.32Andforecastsindicatethatcouldrisetonearly10GWofaddedcapacityin2023and12GWin2024.33

Batterystoragecostsareexpectedtocontinuerisingin2023,thoughthattrendcouldreverselongertermandisunlikelytodampendemand.Averagepricesrosetoabout$200/kWhinH12022,largelyduetosupplychainchallenges,afterdecliningformorethanadecadetoapproximately$175/kWhin2020.34Butdemandisexpectedtoremainrobustasdriversandusecasesexpand,including:

•Growingrenewablesdeploymentmeansgrid-scalestorageisoftentappedforfrequencyresponseorspinningreserves,35whicharegridservicesthatcanmitigatewindandsolarintermittency.

•Renewablesarealsosparkingarbitrageopportunities:Batterystoragecanchargewithlow-marginal-costwindorsolarpoweranddischargewhenmoreexpensivenaturalgasorcoal-firedplantsaresettingelectricityprices.36

•Increasinglyextremeweatherandclimateeventsmakestoragemoreattractiveasahedgeagainstoutages.

•Inthemidcontinentandmid-Atlanticregions,storageisbeinginstalledtoreplaceretiringcoal-firedunitsandtoprepareforrisingrenewabledeployment.37

•Developersareintegratingbatterystorageintomorethan95%ofnewsolarprojectsinCalifornia,whileinothermajorregionsthatpenetrationisuptoatleast20%andexpectedtoincrease.38Figure3providesaregionalbreakdownofUSoperatingbatterycapacity.

Figure3.RegionalbreakdownofUSoperatingbattery

capacity(asofSeptember2022)

1%

16%

3%

4%

4%

55%

17%

CAISOCaliforniaIndependentSystemOperator

ERCOTElectricReliabilityCouncilofTexas

ISO-NEIndependentSystemOperator-NewEngland

PJMPennsylvania-NewJersey-MarylandInterconnection

AK/HIAlaska/Hawaii

MISOMidcontinentIndependentSystemOperator

Otherregions

Sources:EIAPreliminaryMonthlyElectricGeneratorInventory(basedonFormEIA-860MasasupplementtoFormEIA-860),September2022;Deloitteanalysis.

Supplychainkinkscouldcontinueinto2023,largelyduetothepaucityofbatteryandcriticalmineralsuppliersandconcernaboutunethicallaborpractices,especiallyincobaltmining.39Butalternatebatterychemistries(suchaslithiumironphosphate)couldscaleupfortheelectricvehicle(EV)market,helpingreducethedemandforlithium-ionbatteries.40Inaddition,theIIJAisinjecting$7billionintoUSbatteryandcomponentmanufacturingandrecycling,aswellasextractionandprocessingofcriticalmaterialssuchaslithium,cobalt,nickel,andgraphitetodeveloparobustdomesticbatterysupplychainforUSEVandgridstoragemarkets.41

Finally,theIRAisexpectedtoboostbatterystoragedevelopmentby30GW,or111GWh,from2022to2030,42duetoits30%investmenttaxcredit(ITC)foreligiblestorageprojects,with10%addersformeetingdomesticcontentspecificationsorbeinglocatedinadesignated“energycommunity.”Previously,energystoragetaxcreditswereavailableonlywhentheprojectwasco-locatedwithsolarandpartofthesolarproject.

2023powerandutilitiesindustryoutlook6

Tofuelpowergeneration

Tofueldistributedhydrogenfuelcells

Asawayto“store”excesswindandsolaroutput

Other

4

Decarbonizedfuels

Powerandutilitycompaniesseeopportunitiestoreapvaluefrom

cleanhydrogen

Therehasbeenafrenzyofactivityingreenhydrogen,andit’slikelytoacceleratein2023andbeyond,partlyduetonewincentivesintheIRA.43“Clean”hydrogenpriceswilllikelybecomecompetitivewithconventionalhydrogeninmanyUSregions,44thoughitsusemaystillbeinfeasibleforapplicationsthatrequirenewtransportation,storage,andotherinfrastructure.Powerandutilitycompaniesareconsideringwhichoptionsmakethemosteconomicsenseinthenearterm.45

TheIRAprovidesanewtaxcreditforqualified“cleanhydrogen”facilities,wherehydrogenisproducedthroughaprocessthatresultsinalifecycleGHGemissionsratenotexceeding4kilograms(kg)ofcarbondioxideequivalentperkilogramofhydrogen.46ThetaxcreditvariesdependingonthelifecycleGHGemissionsrate,withthefull$3/kgtypicallyapplyingtohydrogenproducedthroughrenewable-ornuclear-poweredelectrolysis.47

Thepowerandutilitiessectorhastypicallyproducedandconsumedanegligibleshareofhydrogen,butthatcouldbegintochangein2023.48Powercompaniesareevaluatinghydrogenoptionswithaneyetothosemostimmediatelyeconomicallyfeasible.Producingcleanhydrogenusingrenewableornucleargenerationisoftenanattractiveoption.AnditcouldpotentiallyqualifyforatleasttwoIRAtaxcredits:anITCoraPTCfortherenewableornucleargeneration,andacreditforthehydrogenproduction.49Belowarefivewayssomepowercompaniesareconsideringmonetizingcleanhydrogen’svalue,andfigure4providesperspectivesfromourindustrysurvey:

•Sellittoindustrialortransportationsectorconsumers.Siteelectrolyzersnearconsumers(suchasoilrefinersandammoniaproducers)thatalreadyuseconventionalhydrogenanddon’trequirenewinfrastructure.50Proceedscanhelppowercompaniesexpandrenewablesandsupportnuclearplants.

•Storeanduseitaslong-durationenergystorage.Hydrogencouldbeawayto“store”excesswindandsolaroutputlongerthanthetypicalfour-oreight-hourbatterysystemallows.51Storedhydrogencouldfuelpowerplantswhenwindandsolarareoffline.However,thiscouldrequirenewstoragefacilitiesandgasturbinesthatcanrunon100%hydrogenorhydrogenblends.

•Provideflexibledistributedgenerationthroughhydrogenfuelcells,whichcouldpowerindustrialandcommercialendusers,helpbalanceload,provideresiliency,andmitigaterenewablevariability.FuelcellscouldalsoqualifyforanITC.

•Useittohelpdecarbonizetheirownnaturalgasdistributionsystems,orsellittoothergasutilities.Levelsabovea5to15%blendwithnaturalgascouldrequiresignificantupgradestodistributioninfrastructureandend-userappliances.52

•Useitforbaseloadpowergeneration.Economicsarecurrentlychallengingatthescaleneeded,thoughnewgas-firedgenerationwilllikelybebuiltwiththecapacitytouseincreasingamountsofhydrogeninthefuture.53

Figure4.Whatshouldbegreenhydrogen’smostimportantroleinthepowerandutilitiessectorasitbecomescost-competitivewithconventionalfuels?

29%

Tohelpnaturalgasutilitiesdecarbonizetheirgassupplies

28%

19%

19%

5%

0%5%10%15%20%25%30%35%

2023powerandutilitiesindustryoutlook7

Source:Deloitte2022powerandutilitiesindustrysurvey.

5

Transportationelectrification

Utilitieslikelytosharpenfocusonpreparingforelectricvehiclegrowth

UtilitieswilllikelyacceleratetheirEVplanningandprogramsin2023,asUSEVmarketshareexceeded6%ofnewcarsalesinH12022,theIRAofferednewEVtaxcredits,andfederalandstategovernmentssetambitiousgoalsforEVpenetration.54TheBidenadministrationsetaUSgoalof50%EVmarketshareby2030.55Inaddition,California’snewAdvancedCleanCarsII(ACCII)regulationsrequire100%ofcarssoldinthestatetobezeroemissionvehicles(ZEV)by2035.56NewYorkhasfollowedsuit,57andatleastfouroftheother17statesthathadadoptedCalifornia’soriginalAdvancedCleanCarsI(ACCI)regulationsareconsideringadoptingthisnew,stricterstandard.58Figure5mapsthese17states.

Figure5.StateswithZEVandcleancarstandards

Cleancarstates

StatesadoptingCalifornia’sACCIregulationsbutnoZEV

ZEVandcleancarstates

StatesthathaveadoptedZEV

andCalifornia'sACCIregulations

StatesthatplantoadoptCalifornia's

ACCIIrulerequiring100%ofvehicles

soldinthestatetobeZEVby2035

Washington

Maine

Minnesota

Vermont

NewYork

Oregon

Massachusetts

RhodeIsland

Connecticut

Pennsylvania

Nevada

NewJersey

Delaware

California

Colorado

DistrictofColumbia

Maryland

Virginia

New

Mexico

Source:CaliforniaAirResourcesBoard,”

StatesthathaveAdoptedCalifornia’sVehicleStandardsunderSection177oftheFederalCleanAirAct,

”May13,2022.

SomeofthethorniestchallengestomeetingthesegoalscouldbefortheautoandbatteryindustriestoproduceenoughEVsandbatteries,givensupplychainconstraintsandIRAtaxcrediteligibilityrequirementsforEVs.59Surveyedpowerandutilitiesexecutivesperceivetheirsector’skeyprioritiesassupportingcharginginfrastructurebuildout(43%);upgradingdistributionassetstoprepareforincreasedload(36%);andpreparingtomanagenewloadwithEVratestoencourageoff-peakcharging(18%).60Belowaresomeimportantfocusareasfor2023andbeyond:

•Vehicle-gridintegration:WhileUSelectricitygenerationisgenerallydeemedsufficienttohandletheroughly2%annualdemandgrowthexpectedfromEVs,61spreadingoutdemandovertimeandupgradingdistributionsystemequipmentinhigh-adoptionareasisapriority.Utilitiesareincreasinglysettingratesthatencourageoff-peakcharging—andnewsubmeteringtechnologyenablesthemtochargeseparaterateswithoutinstallingadditionalmeters.62Someutilitieswilluseaccumulateddatatofine-tunemanagedchargingprograms.Andwhilewidespreadadoptionofbidirectionalvehicle-to-grid(V2G)technologiesmaystillbeseveralyearsoff,pilotactivityislargelyfocusingonfleetV2Gprogramsandvehicle-to-homecharging.63

•Charginginfrastructurebuildout:All50stateshavesubmittedEVinfrastructuredeploymentplanstoaccesstheIIJA’s$5billionallocationfor500,000fast-chargingstationsacross53,000milesoverfiveyears.64Andmanyutilitieswillbeprovidingtheadditionalequipmentupgrades,or“makereadies,”topreparesitesforchargerinstallation.Sincefastchargersrequireasignificantamountofpower,utilitiesaregearinguptoprovideextrainfrastructuresuchasconduit,trenching,cabling,andswitchgear,includingnewtransformersandmeters(muchofwhichstillfacessupplychainconstraints).Manyutilitiesarealsocoordinatingwithfleetoperatorstosupportcharginginfrastructurefortrucksandotherheavy-dutyvehicles.

•Medium-andheavy-dutyvehicleuptake:Nearly20statesandjurisdictionsareaimingfor30%ofnewmedium-andheavy-duty(MDHD)vehiclesalestobeelectricby2030,and100%by2050.652021–2022sawunprecedentedMDHDgrowthininvestment,policysupport,anddeployment,66andutilitiesareincreasinglyofferingprogramstopromoteandenableMDHDvehicleuptake.ThisincludespilotingseveralelectricschoolbusV2Gprograms.Adoptionislikelytoacceleratefurtherin2023withIIJAinvestments,suchas$5billionforelectricschoolbusesand$5.6billionforelectrictransitbuses.Schooldistrictsfromall50statesappliedfor$500millioninEPA2022CleanSchoolBusRebates,promptinganincreaseto$965million.67

2023powerandutilitiesindustryoutlook8

Innovation,investment,andindustryconvergencecouldcounterheadwinds

In2023,supplychainsnags,risingcosts,andextremeweatherarelikelytocontinueplaguingthepowersector.Butpromisingtrendsininnovationandinvestment,buoyedbyrecentlegislation,canhelpthesectorfulfillitsmissiontoprovideincreasinglysecure,reliable,clean,andaffordableelectricity.Powerandutilitycompanieswilllikelyleanfurtherintoevolvingtechnologiesandnewbusinessmodels.IntegratingtechnologiessuchasAMI2.0,batterystorage,cleanhydrogen,andEVscanboostsystemflexibilityandagilitytohelpoffsetrisingcostsandincreaseresiliencetoextremeweatherevents.

Inthenewyear,powerandutilitycompanieswilllikelycontinuetoseekguidancefromfederalandstategovernmentsonhowtoaccesstheconsiderablecleanenergysupportandincentivesprovidedbytheIRAandIIJAlegislation.Utilitydecarbonizationplansoftencontaincaveatsstatingthatgovernmentresearch,development,anddeploymentsupport,funding,andincentivesfornewtechnologieswillbeneededtoreachnet-zerogoals.Thecavalrymayhavearrived.

Thesectorcanalsocontinuetoseekopportunitiesforpartnershipstoaccesscapabilities,technologies,andassetsinadjacentsectorssuchasoilandgasandmanufacturing,aswellasautomotive,technology,mining,realestate,andgovernmenttoadvancetheenergytransition.Asthecleanenergytransitionprogresses,opportunitieswilllikelycontinuetoexpandacrosstheentireeconomy.

2023powerandutilitiesindustryoutlook9

2023powerandutilitiesindustryoutlook10

Let’stalk

JimThomson

Vicechair,USPower,Utilities&

RenewablesLeader

DeloitteLLP

jamthomson@

/p>

KateHardin

ExecutiveDirector

DeloitteResearchCenterfor

Energy&Industrials

DeloitteServicesLP

khardin@

+16174373332

Keycontributors

SuzannaSanborn,seniormanager,DeloitteResearchCenterforEnergy&Industrials,DeloitteServicesLP

AkashChatterjee,analyst,DeloitteResearchCenterforEnergy&Industrials,DeloitteServicesIndiaPrivateLimited

2023powerandutilitiesindustryoutlook11

Endnotes

1.USEnergyInformationAdministration(EIA),ElectricPowerMonthly,

Table5.1,“Salesofelectricitytoultimatecustomers,”Allsectors,October25,2022.

2.Wi