Electric Power Generation & Distribution
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 2,227 electric power generation and distribution companies in the US produce and deliver electricity to residential customers, commercial businesses, and industrial operations. The industry consists of publicly-owned utilities, electric co-operatives, investor-owned utilities, and power marketers. Operations are either fully or partially regulated, depending on the State they operate in.
Changes in Environmental Laws and Regulations
Environmental laws and regulations are changing constantly and can have large impacts on electric utilities.
Shift to Natural Gas Generation
Low natural gas prices and restrictions on coal and nuclear plants are causing a shift to natural gas for new generating capacity.
Industry size & Structure
A typical electric power company operates from multiple locations and has revenues of about $253 million per year.
- There are 2,227 firms providing electric power utility services in the US, employing 500,000 workers, and generating annual revenue of $563 billion.
- 58.8% are publicly owned utilities, 25.5% are cooperatives, 5.2% are investor-owned utilities, 9% are power marketers, and 1.6% are either community choice aggregators, behind-the-meter (on-site generation), or federal power agencies.
- Public utilities serve 14.8% of US customers, cooperatives serve 12.9%, investor-owned utilities serve 66%, power marketers serve 4.6%, and behind-the-meter (on-site generation) serves 1.6%.
- 45% of establishments have fewer than 20 employees, and 20% of firms are large with over 100 employees each.
- Large electric power utilities include: Exelon Corp., Southern Co., First Energy, Puerto Rico Electric Power Authority (PREPA), PSEG Long Island, Los Angeles Department of Water and Power (LADWP), Withlacoochee River Electric Cooperative, Cobb Electric Member Corporation and Middle Tennessee EMC.
- Entry into the business as a for-profit enterprise in the distribution business is difficult as most population centers are in franchised territories as designated by the state public utility commission. Entry into the generating business as an independent power producer (IPP) has a lower barrier, requiring only permits and capital for construction and certification by the ISO.
Industry Forecast
Electric Power Generation & Distribution Industry Growth
Recent Developments
Nov 22, 2024 - DoE Announces Power Project Funding
- In October, the US Department of Energy (DoE) awarded $3.5 billion in funding to support expanded electricity transmission infrastructure and climate resistance grid projects. Nearly $2 billion will go for grid-shoring projects in 42 states and the District of Columbia, including six in Florida for damage caused by hurricanes Helene and Milton and 950 miles of new and higher-capacity transmission lines. The DoE is also providing $1.5 billion in funding to add 1,000 miles of new transmission infrastructure and 7,000 megawatts of new electricity capacity in Louisiana, Maine, Mississippi, New Mexico, Oklahoma, and Texas.
- The electricity-hungry artificial intelligence boom is spurring big tech firms to seek out new sources of clean energy to help meet the emissions-cutting pledges they made just a few years ago, according to The Wall Street Journal. The tech industry’s quest for clean energy comes amid an anticipated rise in electricity demand fueled by AI. A search on a generative AI platform uses ten times the electricity of a typical Google search. AI’s energy needs have created more cooperation between large tech firms and utilities. Google is partnering with a Nevada-based firm to buy geothermal power, and the search giant, along with Amazon and Microsoft, is working with Duke Energy on power produced by small nuclear reactors. Tech firms also hope to offset their increased emissions by entering deals with firms pursuing carbon capture technologies.
- A surge in US electricity demand – driven by data center growth, cryptocurrency mining, building and vehicle electrification, and battery and fuel cell manufacturing - could boost the costs utilities pay for electricity by 19% by 2028, according to a report released in September by consulting firm International Finance Corporation (IFC). Some parts of the country - including Texas, New England, and the Southeast – could see prices rise even more. The IFC report predicts electricity demand will increase by 9% by 2028 and 18% by 2033, or an annual average of about 2% per year compared to 2024 demand levels. To meet the rise in demand, the IFC says utilities will need to leverage new technologies, including AI-enabled efficiencies, along with a balanced mix of new supply.
- In the effort to reduce greenhouse emissions, a handful of US gas-fired power plant operators have taken steps to integrate hydrogen into their fuel mix, according to the US Energy Information Administration. Hydrogen combustion doesn’t create CO2 emissions. Five power plant operators have already performed hydrogen cofiring testing, and two others have planned cofiring upgrades to existing plants. Three power plant operators have new plants under construction that are expected to have hydrogen cofiring capability. Recently updated EPA power plant emissions rules and production tax credits through the Inflation Reduction Act are prompting some operators to add hydrogen to their fuel mixes.
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