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Why Electricity Demand Is About to Get a Jolt

We highlight three utilities that should benefit from our forecast of 1.25% annual electricity demand growth through 2030.

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Andrew Bischof: U.S. electricity demand has flatlined during the last decade, but we think it is set to spring to life. Energy efficiency will remain a drag on electricity demand, but those gains face diminishing returns. We think three emerging electricity demand sources--electric vehicle charging, data centers, and cannabis cultivation--will approach 6% of total U.S. electricity demand by 2030, offsetting energy efficiency and supporting our 1.25% annual electricity demand growth forecast through this time period.

Utilities will have to work hard to benefit from these new demand sources. The most successful utilities must attract these industries by investing in grid expansion, smart networks, safety, reliability, and renewable energy during the next decade. Utilities that slack on investment now could face slowing earnings and worse, dividend growth. Worst case, utilities that miss out on this new demand might face the so-called death spiral, leaving investors with disappointing future returns. We highlight three utilities that should benefit from our forecast. 

Andrew Bischof does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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