The Prognosis of Power and Utilities Sector in 2022
The power and utilities industry has undergone significant upheaval over the past few decades. The pandemic has added to the mayhem, requiring power and utility sectors to invest in innovative technology. As the energy transition progresses, it pushed countries to increase their decarbonization programs and expect this disruption to exacerbate.
In 2021, the power and utilities business faced profound challenges, made significant advancements, and acquired clean energy support from a new administration.
“Electricity sales increased 3.8 percent year through August 2021 over the prior year as the US economy started to emerge from its pandemic-induced downturn.”
Simultaneously, the grid’s stability and resiliency were being challenged by unprecedented and unanticipated severe weather occurrences, and cyberattacks on vital infrastructure were gaining traction.
The significant problems will persist in 2022:
- Increasing clean energy
- Maintaining reliability and resiliency, and
- Ensuring security while controlling costs.
To meet this formidable challenge, the power sector will almost undoubtedly keep its “3D” transformation:
New technologies also enable new business models and expand opportunities to increase operational efficiencies. However, regulatory frameworks are still catching up. Industry expenses are expected to stay robust, and renewable penetration is expected to grow.
The need to address the climate crisis, as well as rising influence from governments, customers, and investors for sustainable and equitable action, are propelling environmental, social, and governance (ESG) objectives and disclosures to the top of business agendas worldwide.
The Biden Administration intends to reduce 80 percent carbon emissions in the utilities sector by 2030, with the goal of complete decarbonization by 2035, and its emphasizing renewables and electric vehicles (EVs), among other green projects.
Power and Utility Trends to Look Out
Utilities are likely to expound on their decarbonization strategies.
“By the final quarter of 2021, 46 of 54 US investor-owned utilities had promised to decrease carbon emissions, with several providers vowing to do so by 2050.”
The below factors drive more utilities to join on board and tighten up promises and strategies in 2022.
- Prospects for value creation
- Environmental, social, and governance (ESG) goals
- Emerging state clean energy laws
- Potential federal legislation.
The utility business will need to upgrade its transmission capabilities across the grid. To effectively fulfill the decarbonization expectations of the power and utilities industries, billions of dollars of investment and years of dedicated work will be required to execute the planning, cost estimation, and construction to optimize renewables.
Clean Energy Transition
As the electric power sector continues to modernize the grid, firms are contemplating how 5G communications technology and cloud will help them leverage the potential of the expanding wave of connected devices and data.
“According to a survey of networking executives across businesses conducted by Deloitte in 2021, 58 percent of respondents had already deployed 5G or are running pilots.”
Utilities will confront increased challenges as the energy transition continues into 2022 and beyond. Utilities can stay productive and effective by investing in their operations and establishing new business models and technologies.