Major U.S. utilities have seen their annual spending on production and delivery increase by 12% from $287 billion in 2003 to $320 billion in 2023, accounting for inflation. More capital investment in electric infrastructure has been the primary driver of the additional costs, according to a new analysis from the U.S. Energy Information Administration (EIA).
Capital investment from utilities has more than doubled since 2003, as utilities have replaced and upgraded aging generation and delivery infrastructure; installed new generation like natural gas, wind, and solar, followed by battery storage; connected new lines to renewable resources; deployed new technology like smart meters, sensors, and automated controls.
Production spending fell 24% from 2003 to 2023, which EIA attributes to lower fuel costs and the retirement of older fossil fuel plants, which can be expensive to maintain. However, capital spending on production increased by 23% in 2023 compared to 2022, representing a $4.7 billion increase. The majority of this increase came from the construction of Georgia Power’s Vogtle nuclear power plant, EIA said.
On the other hand, transmission spending nearly tripled from 2003 to 2023, reaching $27.7 billion. Transmission investment increased by $2.7 billion from 2022 to 2023, which EIA attributes to spending on transmission station equipment, poles, and computer software.
Capital spending on the distribution system was the main driver of electricity spending increases since 2003, EIA said, increasing by $31.4 billion, or 160%. Over a fifth of the increase happened between 2022 and 2023, where spending increased by $6.5 billion to a total of $50.9 billion from utilities replacing and upgrading aging equipment, and installing new lines, transformers, and other distribution equipment.
Utilities spent $17.4 billion on overhead infrastructure like lines, poles, and towers in 2023 – an 11% increase from 2022, and a 220% increase from 2003. Underground lines weren’t ignored either – investment in undergrounding has more than doubled over the past 20 years, reaching $11.8 billion in 2023.
Investment in line transformers also increased 23% from 2022 to $7.5 billion in 2023, which EIA said is a result of supply chain and manufacturing issues that continue to plague the electric industry. The National Renewable Energy Laboratory (NREL) estimates distribution transformer supply may need to increase 160%–260% by 2050 compared to 2021 levels to meet residential, commercial, industrial, and transportation energy demands. NREL says the demand increase is largely driven by aging transformers and electrification.
Investment in substation equipment hit $6.1 billion in 2023, an 184% increase from 2003 and a 15% increase from 2022. Additionally, spending on meters, leased property, and rooftop solar installations reached $5.1 billion in 2023, an 84% increase from 2003 and 25% from 2022.
Energy storage still remains a small portion of utilities’ total distribution budgets, but spending on storage has increased from $97 million in 2022 to $723 million in 2023.
