Electric Utility

Electric Utilities & Power Generators

The Electric Utilities & Power Generators industry is made up of companies that generate electricity; build, own, and operate transmission and distribution (T&D) lines; and sell electricity. Utilities generate electricity from a number of different sources, commonly including coal, natural gas, nuclear energy, hydropower, solar, wind, and other renewable and fossil fuel energy sources. The industry comprises companies operating in both regulated and unregulated business structures. Regulated utilities maintain a business model in which they accept comprehensive oversight from regulators on their pricing mechanisms and their allowed return on equity, among other types of regulation, in exchange for their license to operate as a monopoly. Unregulated companies, or merchant power companies, are often independent power producers (IPPs) that generate electricity to sell to the wholesale market, which includes regulated utility buyers and other end-users. Furthermore, the industry is divided across regulated and deregulated power markets—referring to how far up the value chain regulated utility operations span. Regulated markets typically contain vertically integrated utilities that own and operate everything from the generation of power to its retail distribution. Deregulated markets commonly split generation from distribution, designed to encourage competition at the wholesale power level. Overall, companies in the industry are challenged with the complex mission of providing reliable, accessible, low-cost power while balancing the protection of human life and the environment.

Fuel Cells & Industrial Batteries

The Fuel Cells & Industrial Batteries industry consists of companies that manufacture fuel cells for energy production and energy storage equipment such as batteries. Manufacturers in this industry mainly sell products to companies for varied energy-generation and energy-storage applications and intensities, from commercial business applications to large-scale energy projects for utilities. Companies in the industry typically have global operations and sell products to a global marketplace.

Solar Technology & Project Developers

The Solar Technology & Project Developers industry comprises companies that manufacture solar energy equipment, including solar photovoltaic (PV) modules, polysilicon feedstock, solar thermal electricity-generation systems, solar inverters, and other related components. Companies may also develop, build, and manage solar energy projects and offer financing or maintenance services to customers. Two primary technologies are utilized in the industry: PV and concentrated solar power (CSP). Within solar PV, there are two main technologies: crystalline silicon-based solar and thin-film solar, which includes panels made using copper indium gallium selenide and cadmium telluride. The primary markets for solar panels are residential, non-residential (commercial and industrial), and utility-scale projects. Companies in the industry operate globally.

Wind Technology & Project Developers

The Wind Technology & Project Developers industry comprises companies that manufacture wind turbines, blades, towers, and other components of wind power systems. Companies that develop, build, and manage wind energy projects are also included within the scope of this industry. Manufacturers may also offer post-sale maintenance and support services. Turbines can be installed onshore or offshore, which can cause differences in wind-generating capacity and create challenges in project development for each type of installation. Most major wind technology companies operate globally.

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Source: SASB

The power sector has been investing heavily in low-carbon sources for years, but alternative sources such as wind and solar have developed faster than nuclear and hydropower. Despite representing only 20% of electricity's share in total final energy consumption, the sector is responsible for 40% of CO2 emissions. Decarbonizing transportation, industry and other sectors is key to achieving a sustainable future. Companies are using different approaches to decarbonize the sector depending on their location, with Europe focusing on renewable energy projects and the US focusing on carbon intensity reduction. Flexibility will be crucial in the future as the sector moves towards higher shares of variable renewables, making investments in wind, solar PV, dispatchable renewables, and nuclear power critical for decarbonization.

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Industry Characteristics

• Low-carbon sources’ total share in the energy mix has been kept at roughly the same level as in the early 2000s. Despite the large investments in wind and solar over the last ten years, these efforts have only compensated for the low growth in other sources such as nuclear and hydropower. Source: IEA

Sustainability Impact

• The power sector is extremely important in the global decarbonisation effort. While electricity’s share in total final energy consumption is less than 20%, almost 40% of CO2 emissions are attributable to the electricity sector. Furthermore, deep decarbonisation of the electricity system is necessary if electrification in transport, industry and other sectors is to become the key to further decarbonisation. Source: IEA

Sustainability Investments to watch

• The path to decarbonization is not necessarily linear. Some transitions will require a significant upfront investment that would be associated with higher emissions in the near term – think of building new turbines as an example here. Source: BlackRock
• European and US traditional energy companies are taking divergent approaches: European companies have been more likely to invest in renewable energy projects while their American counterparts have generally focused on reduction of carbon intensity associated with oil projects. Source: BlackRock
• Even if wind and solar PV deployment could be accelerated, other low-carbon technologies like dispatchable renewables, nuclear power and CCUS also need to be expanded at a massive scale to decarbonise the power sector. Source: IEA
• By 2030, expected higher shares of variable renewables in many power systems will require increased flexibility, which could be provided from many sources, including through the investment in grid interconnection, batteries and demand response, although dispatchable power plants will remain the cornerstone of system flexibility. Source: IEA

• Electricity generation from bioenergy
• Electricity generation from fossil gaseous fuels
• Electricity generation from geothermal energy
• Electricity generation from hydropower
• Electricity generation from nuclear energy in existing installations
• Electricity generation from ocean energy technologies
• Electricity generation from renewable non-fossil gaseous and liquid fuels
• Electricity generation from wind power
• Electricity generation using concentrated solar power (CSP) technology
• Electricity generation using solar photovoltaic technology
• Manufacture of batteries
• Manufacture of low carbon technologies for transport
• Manufacture of renewable energy technologies
• Cogeneration of heat/cool and power from geothermal energy
• Cogeneration of heat/cool and power from solar energy
• Production of heat/cool from solar thermal heating
• Production of heat/cool using waste heat