Skip to main content

2024 power and utilities industry outlook

Power and utilities industry trends

The industry will likely seek to harness new policies, technologies, and market innovations as they navigate an evolving landscape of opportunities, complexity, and challenges.

In 2023, the US power and utilities industry raised the decarbonization bar, deployed record-breaking volumes of solar power and energy storage, and boosted grid reliability and flexibility—with a healthy assist from landmark clean energy and climate legislation. All of this will likely continue in 2024. Industry fundamentals were mixed, with electricity sales projected to end 2023 down about 1.2% year over year (YoY), due largely to mild winter weather.1 Supply chain knots began to unwind, but shortages of steel, aluminum, transformers, and other components and materials still managed to disrupt the industry and boost costs.2

Wholesale electricity prices eased in many regions as natural gas costs for power generation fell about 53% YoY in 2023, compared to the previous year.3 But not all utilities purchase electricity in wholesale markets and fuel costs are just one part of customer electricity bills, so price movement may not correlate closely.4 Record-high capital expenditures of almost US$171 billion in 2023 for the largest electric and gas utilities to modernize and decarbonize the grid,5 combined with robust future spending requirements and rising interest rates, can exert upward pressure on customer bills. Mounting costs for weather and climate disaster recovery, wildfire prevention, and cyber and physical security programs can also contribute to increases that are often ultimately passed along to customers. Therefore, despite lower fuel costs, average US retail electricity prices are forecast to rise 1.9% YoY by year-end 2023.6 For the residential segment, the YoY price jump could be even higher—at about 4.7%—and that follows a roughly 10% increase in 2022.

Did you find this useful?

Thanks for your feedback

If you would like to help improve further, please complete a 3-minute survey