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 1,900 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 $243 million per year.

    • There are 1,900 firms providing electric power utility services in the US, employing 380,700 workers, and generating annual revenue of $473 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 22, 2022 - Grid-Enhancing Technologies Needed to Bridge Clean Energy Transformation Gap
                                • At the recent WIRES conference in Washington DC, electricity industry panelists suggested transmission planners and regulators should use “grid enhancing technologies” (GETs) to quickly ramp up transmission capacity as the country transitions to clean energy, according to Utility Dive. To meet clean energy goals and support the growing number of electric vehicles and homes, annual US transmission spending will need to triple, according to UK-based electric power and gas firm National Grid. However, because transmission projects can take a decade to build, electric utilities need to optimize their grids with GETs. Examples of GETs include digital substations, power flow technologies, advanced conductors, energy storage, and advanced power flow controllers. WIRES is a trade group consisting of transmission providers and customers, regional grid managers, and equipment and service firms.
                                • On a seasonally adjusted basis, the total value of power project construction put in place decreased by 0.3% in September 2022 compared to August, according to the US Census Bureau. Unadjusted power project construction spending was down 8.1% in September compared to a year earlier and fell 11.4% on a year-to-date basis from the first nine months of 2021. In September, the seasonally adjusted total value of sewage and waste disposal projects put in place fell 1.5% compared to the month before; spending was 16% higher than in September 2021 on an unadjusted basis. Adjusted water supply project spending was down 1.4% in September compared to August, but unadjusted water supply project construction spending increased 26.7% year over year.
                                • Solar installations of 1,877 megawatts (MW) in Q3 2022 were down 23% compared to Q3 2021, according to the American Clean Power Association’s (ACP) latest Clean Power Quarterly Market Report. Solar capacity additions have been slowed by a shortage of solar panels, in large part due to US Customs enforcement, including under the Uyghur Forced Labor Prevention Act. Despite delays and rising costs, the pipeline of new renewable projects is robust. At the end of Q3 2022, solar accounted for 60% of the renewable project pipeline, with 78,181 MW in development. Texas leads the nation with the largest amount of solar capacity in the development pipeline, followed by California and Indiana. While the renewables sector faces some short-term setbacks, the ACP anticipates the Inflation Reduction Act (IRA) will help bring 550 gigawatts of clean energy online by 2030.
                                • In the third quarter of 2022, the wind sector added 356 megawatts (MW) of new land-based generating capacity, down 78% compared to Q3 2021, according to the ACP’s latest Clean Power Quarterly Market Report. The slowdown in the wind sector was due to supply chain-related delays and delays in grid interconnections. Overall, more than 1.1 GW of land-based wind that was planned to come online was delayed. However, most of those projects are projected to be completed before the end of the year. Texas had the strongest land-based wind project pipeline in Q3 2022, with 6,250 MW in development, followed by Wyoming with 3,000 MW. The leading states for offshore wind development include New York (4,362 MW in development), New Jersey (3,758 MW), Massachusetts (3,242 MW), and Virginia (2,587 MW).
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