What is New in Retail Energy in 2020?
What does 2020 hold for retail energy? Electricity and gas are a part of our daily life. It impacts the comfort and safety of our homes. It also has a significant impact on our monthly budgets.
Below are a few retail energy predictions for the year ahead.
Electricity Demand Will Continue to Increase
Worldwide, the demand for energy is increasing despite many people trying to lower their consumption and energy efficiency improvements. Overall demand has flattened out in the U.S. over the last decade, but that’s the case when you lump all energy sources together. When you look at electricity specifically we see that demand is increasing and that won’t change in 2020. That observation is supported by the U.S. National Renewable Energy Laboratory (NREL).
The rise of electric vehicles is one contributing factor. The increase in the number of devices that are in the average home is another. Air conditioning use has increased in recent years during the long summers. There are also more people living in the U.S. today.
One thing that consumers will be glad to hear is prices shouldn’t change much in 2020. The Energy Information Agency (EIA) is projecting residential electricity prices will increase by less than 1% next year and remain around 12.5 cents per kilowatt-hour on average.
Natural Gas Will Still be Going Strong
Even though more money is being spent on infrastructure, consumers have only seen slight increases in energy prices thanks to natural gas. It’s abundant and extremely affordable – two things that have helped keep wholesale prices very low.
The EIA is projecting that natural gas will increase to 39% of the total electricity generation up from 37% in 2019.
Clean Energy Will Expand All-Around
The biggest trend in 2020 (and the coming decade) is the continued expansion of clean wind and solar energy. Clean energy production has been gaining momentum for years, and now that things are in place to really ramp up generation we expect to see a lot more focus on wind and solar.
Infrastructure and consumer interest in clean energy aren’t the only driving factors in 2020. Wind and solar energy are also getting cheaper to produce. More corporations are also committing to using clean energy, which is a big boost.
For the first time ever, renewable energy production outpaced coal in 2019. It made up 22% of the total capacity. The EIA anticipates that wind, solar, and non-hydropower will tick up 2% more in 2020, going from 411 billion kilowatt-hours (kWh) to 471 billion kWh. Texas will produce 22% of that clean energy and California will produce 14%.
The federal government may not be taking steps to encourage clean energy generation in 2020, but plenty of states and local governments are. Renewable portfolio standards will likely increase in the coming year.
Energy suppliers and utilities are stepping up to take on a leadership role in the transition to cleaner power. In 2020, you can expect to see an increase in renewable energy plans as well as energy companies that are decarbonizing their own operations. Dozens of energy companies across the country have announced carbon reduction goals and more are expected in 2020. A recent Deloitte survey found utilities will also play a crucial role in other corporate organizations’ efforts to transition to 100% renewable energy.
In addition to renewable energy technologies, investment is also being made in:
- Carbon capture and storage
- Energy efficiency
- Next-generation nuclear energy
- Energy storage
- Distributed energy resource strategies
- Cyber risk management
In many ways, 2020 will mark a turning point across the entire retail energy sector from local utilities to power companies to consumers. After years of discussing it, most everyone is now on board with taking significant steps towards making renewable energy the norm.
More Emphasis on Protection During Natural Disasters
Now more than ever, aging electrical grids need to be protected from natural disasters. Utility capital expenditure has been increasing year-over-year just to maintain the current system. In recent years we’ve seen hurricane conditions get more severe and the wildfire season in the west has been extended. There’s a real concern that 2020 might see even more natural disasters.
One area that needs attention is transmission and distribution systems, but overall the energy sector is bracing for an active year in 2020.
Utilities Will Help Build an Electric Vehicle Infrastructure
The number of electric vehicles (EVs) on the road is projected to grow from 1.1 million in 2019 to 20 million by 2030. This will generate a huge need for electricity at people’s homes and on the road. The key to getting more people to adopt EVs is building an infrastructure that supports their use.
Next year, utilities in high-use areas will step up to increase the number of charging stations that are available and the overall infrastructure. They’ll also be working to better manage EV load, which will continue to grow.
Spark Energy is excited about the innovation and transformations that are to come in the new decade. We plan to be at the forefront of providing our customers with a selection of energy plans that give you more options and exemplary customer service. If you need to make a switch in 2020, check to see which Spark Energy electric and gas plans are available in your neighborhood.