Grid infrastructure investments drive increase in utility spending over last two decades

Annual spending by major utilities to produce and deliver electricity increased 12% from $287 billion in 2003 to $320 billion in 2023 as measured in real 2023 dollars, according to financial reports to the Federal Energy Regulatory Commission (FERC). Capital investment in electric infrastructure mostly drove the increase, more than doubling over the period as:

• Aging generation and delivery infrastructure were replaced or upgraded to resist fire and storm damage.
• Utilities installed first natural gas-fired generation, then wind and solar generation, and, more recently, battery storage.
• New lines were connected to renewable resources.
• New technology, including smart meters, sensors, and automated controls, was added to the system.

Production

Spending to produce electricity fell 24% from 2003 to 2023, mainly due to lower fuel costs and, to a lesser extent, the retirement of older, costlier-to-maintain fossil fuel plants. Fuel costs, the main operating expense, make up most of the production costs.

Transmission

Spending on electricity transmission systems nearly tripled from 2003 to 2023, increasing to $27.7 billion. Electricity transmission systems consist of the wires and structures required to transmit high-voltage power long distances from the generator to the neighborhood, lower-voltage distribution grid.

Read more about utility spending on Today in Energy.