Utilities Prepare for ESG Financial Challenges
Tom Fanning is the CEO of Southern Company.
Kevin C. Fitzgerald is Chief Utility Officer of Energy Impact Partners.
Tom Flaherty is a Senior Advisor to companies in the global power and utilities industry for PwC Strategy&.
The utility industry has powered America's development and growth for more than a hundred years. Since the late 1800s, power companies have successfully met the needs for electricity through a range of supply sources. A vibrant generation sector comprised of both conventional and unconventional assets spans the eras of coke to hydro to coal to gas to nuclear to renewables to batteries and beyond.
Total gross plant-in-service of the power sector is currently more than two trillion dollars. Total plant-in-service investment has been increasing by more than a hundred billion dollars annually since 2014, with generation comprising about twenty-eight percent of this investment in 2019, down from thirty-six percent in 2013.
See Figure 1.
This decline is partially due to the advent of federal and state-level environmental regulations evolving toward more stringent greenhouse gas controls resulting in a de facto prohibition on new coal, substantial retirements of existing coal, emerging discussion of the future of gas, and an explosion of renewables development.