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Electric power utility herndon5/19/2023 Traditional oil and gas companies are also increasingly entering the renewables space. The US tops the EY Renewable Energy Country Attractiveness Index because of growing interest in renewables. Moreover, rapidly increasing corporate demand for renewable energy will drive utilities to continue to expand their procurement and investment in renewable technologies and expand green tariffs. Renewables growth will remain strong in the US thanks to the continued availability of federal tax credits, a push to decarbonize and expanded renewable requirements at the state level, such as renewable portfolio standards. Despite near-term supply chain challenges, the US renewables market will be strong The opportunity is ripe as 92% of the average US population has adopted at least one new energy product or service. With end-to-end solutions across multiple energy partners increasingly in demand, these investments aim to align to customers’ interest in self-generation (86%), automated heating and cooling (22%), e-mobility (19%), and storage (17%), according to a recent EY survey. US utilities could execute some strategic tuck-in acquisitions to expand their portfolio of products and services, potentially driving higher revenues from their current existing customer base (including energy services, home solutions and smart products, distributed generation plus storage technologies, and data analytics). M&A data also shows that foreign investments will continue into the US market, as allowed returns on equity on transmission and distribution assets continue to be relatively attractive. In the Americas, the year’s M&A activity reached record levels, according to our latest utilities industry transactions and trends report. But in 2021, many key utilities even announced plans to sell part of their transmission and distribution assets to create room in their balance sheet for investments in renewables and prevent incremental issuances of equity. In previous years, utilities focused on selling non-core assets, including merchant generation portfolios and midstream assets. Through spin-offs, stake sales and asset swaps, power and utilities companies continue to redraw their strategies in search of value pools that offer sustained growth in a time of decarbonization and decentralization. Power and utilities divestitures will continue to support investments in renewables Moving into 2022, watch these five trends next year and beyond. And some may even choose to produce their own renewable electricity.Īs energy transition accelerates, utilities will need to invest in every aspect of their operations - from generation to transmission and distribution assets, all the way to the back office - and demonstrate urgency in developing new business models and new technologies. How the industry has historically maintained relationships with consumers will fundamentally change as they increasingly adopt a broader range of new energy products and services, such as tools to accommodate home EV charging and better balance their demand. The Biden Administration aims to slash the utilities sector’s carbon emissions 80% by 2030, with aspirations for full decarbonization by 2035, and it’s prioritizing initiatives to boost uptake of renewables and electric vehicles (EVs), among other green initiatives. Though it will be incredibly challenging, an energy system that produces net-zero greenhouse gas emissions is increasingly within reach over the coming decades. For the power and utilities sector, such pressures are supercharging decarbonization efforts and upending business as usual - and the complexity of meeting expectations from various stakeholders is set to grow. Environmental, social and governance (ESG) goals and disclosures continue to move up boardroom agendas across the business world, accelerated by the need to address the climate crisis and increased influence from policymakers, customers and investors for sustainable and equitable action.
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