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 2,000 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 $287 million per year.

    • There are 2,000 firms providing electric power utility services in the US, employing 500,500 workers, and generating annual revenue of $574.6 billion.
    • 59% are publicly owned utilities, 25.2% are cooperatives, 5.2% are investor-owned utilities and 9.3% are power marketers.
    • Public utilities serve 14.5% of US customers, cooperatives serve 13.2%, investor-owned utilities serve 67% and non-utilities and power marketers serve 4.8%.
    • 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
                                Source: Vertical IQ and Inforum

                                Recent Developments

                                Nov 20, 2023 - Power Projects Poised for Growth
                                • North American engineering and construction spending is forecast to rise by 5% in 2023 compared to the 12% growth seen in 2022, according to FMI’s fourth-quarter 2023 North American Engineering and Construction Outlook. Driven by investments in renewable energy, microgrids, and distributed energy projects, spending for power construction is forecast to rise 5% in 2023 and 6% in 2024. Power construction projects will then grow another 7% in 2025 before moderating to annual growth of 6% and 3% in 2026 and 2027, respectively.
                                • The US Department of Energy (DOE) recently announced $1.3 billion in funding for constructing three interregional electricity transmission lines, which will add 3.5 gigawatts to US grid capacity. The projects include a 175-mile transmission line through New Mexico and Arizona, a 214-mile line through Nevada and Utah, and a bidirectional transmission line that will expand New England’s electric grid with additions in Vermont and New Hampshire. The DOE also released its National Transmission Needs Study that finds the US will need a twofold expansion of existing regional transmission capacity and a fivefold jump in interregional transmission capacity to reach the country’s clean energy goals.
                                • A temporary surplus of copper is keeping the metal’s price low despite an anticipated surge in demand led by the shift to electric vehicles (EVs) and renewable energy, according to The Wall Street Journal. Copper prices have fallen about 15% since early 2023 amid China’s slower-than-expected rebound from the pandemic, weaker global manufacturing activity, and normalized production from mines in Chile and Peru that were disrupted during the pandemic. Some mining firms are waiting for prices to rise before increasing their production. Copper prices could rise quickly amid more robust demand from the clean energy transition, creating supply shortages, according to Goldman Sachs.
                                • According to a report released by the Department of Energy (DOE) in September, an approximate three-fold increase in virtual power plant (VPP) capacity to 80GW (gigawatts) to 160GW by 2030 could cut grid costs by about $10 billion. So-called VPPs - which are groupings of distributed electricity resources (DER) such as rooftop solar, electric vehicle charging stations, battery storage, and residential smart thermostats and water heaters - currently have an estimated capacity of 30GW to 60GW. Citing a report by consulting firm The Brattle Group, the DOE says that utilities could reduce net costs by 40% by buying power from residential-based VPPs during peak capacity periods compared to the costs of utility-scale battery power. Residential VPPs have a 60% peak capacity cost advantage over gas-fired power. To boost VPPs, the DOE suggests incentivizing wider DER adoption, simplifying VPP enrollment, standardization of VPP operations, and VPP integration into power markets.
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