3 Utility Picks To Tap Likely Rise In Electricity Consumption

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Consumption of electricity in the United States is expected to witness growth going forward. Per the latest short-term energy outlook of the U.S. Energy Information Administration (“EIA”), total electricity consumption in the country is expected to increase 1.5% in 2021 and 1.7% in 2022. Such a scenario bodes well for electric utility companies since higher consumption would eventually stem from increased generation of electricity.

Notably, EIA mentioned in the report that the pandemic-led social distancing measures as well as restriction on economic activities like limitations on the number of people in restaurants and retail stores, affected the patterns of electricity consumption in 2020. In fact, residential electricity consumption saw an increase as the pandemic forced people to work from their homes. EIA estimated the annual residential electricity sales to increase 2.4% in 2021 and 1.6% in 2022, following growth of 1.3% in 2020.

Meanwhile, as residential electricity consumption increased in 2020, consumption in the commercial and industrial sectors witnessed declines. However, the scenario should change in the long run as deployment of vaccines has already started in the United States. This should allow the economy to operate at its optimum level going forward. Notably, EIA estimated in its outlook that commercial sector consumption fell 6% in 2020. The consumption is projected to make a comeback in 2021 as the EIA forecast it to grow 0.9% in 2021 and 1.8% in 2022. Nonetheless, EIA expected certain trends that emerged during the pandemic, primarily, work from home, to continue even beyond the pandemic, which might reduce the need for electricity at offices. Reflective of this, a survey by Upwork showed that 1 in 4 Americans are set to work remotely in 2021, as quoted in a CNBC article. The article also mentioned that 36.2 million Americans will be working remotely by 2025, which will be an increase of 87% from the pre-pandemic levels.

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