Jan 23 2021: Utilities—time is right to modernize

“We believe tighter environmental regulations are a net positive for most utilities.” —Charles Fishman, Morningstar

Mr. Fishman goes on to say “We believe tighter environmental regulations are a net positive for most utilities. Growth investments in renewable energy, grid modernization, and electric vehicles should outweigh higher regulatory, operational, and financial risk.”

No surprise to read that renewable energy sources continue to make up a bigger piece of utilities’ sources. Here’s a chart from the US Energy Information Administration showing relative growth patterns. True, renewables are still much smaller, but growth drives investment.

Grid modernization improves reliability and resilience, both of which have grown in concern in this century. In an industry survey 88% of responding utilities say that have a grid modernization strategy.

Despite a somewhat sluggish market for electric passenger cars (can you say “charging stations”?), the market for the transportation sector continues to be positively positioned for electric vehicles.

https://www.morningstar.com/articles/1018658/bidens-green-agenda-offers-utilities-growth-potential

https://www.eia.gov/todayinenergy/detail.php?id=42497

https://www.globenewswire.com/news-release/2019/05/21/1833258/0/en/2019-Utility-Survey-Finds-Strong-Vision-and-Broad-Adoption-of-Grid-Modernization-Strategy-Are-Propelling-Utilities-to-the-Future.html

https://www.iea.org/reports/global-ev-outlook-2020