energy-tech
January 17, 2023
2023 Economic and Industry Trends
Expect Continued Economic Uncertainty and Push for Beneficial Electrification
Last year was marked with economic shocks and geopolitical volatility causing almost every single economic, energy and technology forecast to be wrong. From the Federal Reserve’s transitory inflation expectation, its plan for a gradual increase in short-term interest rates and the forecast for the global supply chain to improve by last summer, to continued economic growth and labor participation returning to pre-pandemic levels—prognosticators have missed the mark on many levels.
Economists and market watchers did not fully appreciate how the post-pandemic economy was different from previous economic cycles.
Uncertain macroeconomic conditions—from price instability to rising interest rates—will continue to cause volatility in the capital markets this year. The only economic certainty that may be expected in 2023 is continued uncertainty.
Although the risk of a U.S. recession has increased, I have extreme confidence our network’s financial and operational strength will enable us to take advantage of the coming opportunities, overcoming rising costs, labor shortages and supply chain challenges over the next several years.
The electric cooperative network is well prepared to weather these economic headwinds. The network’s financial and operational strength will enable it to navigate the U.S. economy’s clean energy transition, enhance resiliency and continue to provide affordable, reliable and sustainable energy. This strength will empower electric cooperatives to take advantage of new federal incentives to directly build and operate renewable generation and battery storage projects. The nation’s generation mix will continue to be reliant on natural gas as more renewable generation comes online and coal plants retire. The pace for electric vehicle (EV) sales is expected to continue to gain momentum as automakers launch more new EV models and some commit to replace their entire internal combustion engine lineups in the next 10 years.
Electric cooperatives remain committed to enhancing their resiliency to combat the increased threat of severe weather with new technologies and smart grid infrastructure.
Utility supply chain constraints are expected to persist well into 2024, continuing to increase cost pressures and extend timelines for renewable generation projects, emergency repairs following severe weather and general system operation and maintenance.
Despite current economic volatility, we see opportunities for the electric cooperative network. I see a bright future as we continue to expand access to high-speed broadband and build renewable generation that delivers on our mission to provide affordable, reliable and sustainable power to our member-owners.