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Tags: kilowatt | shareholders

Are Stocks in Electric Utility Companies a Good Buy?

electric utilities revenue
(Maksym Yemelyanov/Dreamstime.com)

Hans Baumann By Sunday, 25 September 2022 06:44 AM EDT Current | Bio | Archive

The recent energy crisis revealed that the output of electric generating power plants are insufficient to supply enough power in cases of bad weather, when solar and wind fail.

Crises those living in Texas and California are all-too-familiar with.

One can be grateful, that our political establishment finally noticed that atomic power plants are the only ones not spewing CO2, and again have allowed the construction of such plants.

The problem is, that it takes 10 to 12 years, before a new plant comes on line.

Adding to the demand for electricity are the ever growing number of electric cars (EVs), demanding on average 50 KWh (Kilowatt hours) of electricity per day.

As of now, the U.S. has registered 1.8 million EVs.

However, that number is estimated to increase, to 4.8 million vehicles by 2030; thus swelling the hearts of climate-concerned people.

Yet, they never seem to realize that the CO2 supposed to be saved by eliminating an equal number of fuel driven cars will now come out of the chimney of still and much needed fuel powered electricity plants (see my column of Sept. 25, 2020).

Those 4.8 million EV’s will need 330,000 MKWh per day, or, 105 billion KWh per year.

In 2021 the total U.S. electric generating capacity was 1.14 billion KWh per day.

This number fairly represents the normal daily consumption.

Assuming the capacity might increase by 1 % per year, then in 2030 there might be 1.3 billion KW capacity per day.

Add to this the 240 million KWh demand from the 4.8 million expected EV’s brings the total demand to, 1.54 billion KWh per day, an increase of 18%.

It's unlikely that the electric generating capacity will increase by 18% in 8 years.

As a result, power plants will do what every businessman will do, increase prices to meet the demand. People in most of the U.S. are already well aware of this tactic.

Part of any price increase will translate into an increase of profit, thus benefitting shareholders.

While current stock prices only increased by 1.6% per year according to the S&P 500 Utility sector, I expect a higher stock values there in light of my forecast.

Besides, there are the current dividends. They range between 2.2 % to 5 % per year.

While not very attractive today, utilities might be a good conservative investment for the coming years.

Dr. Hans Baumann, a former Corporate Vice President and founder of his company, is a well known inventor, economist, and author having published books on scientific, economic, and historical subjects. Read Dr. Hans Baumann's Reports — More Here.

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HansBaumann
One can be grateful, that our political establishment finally noticed that atomic power plants are the only ones not spewing CO2, and again allowing construction of such plants. The problem is, that it takes 10 to 12 years, before a new plant comes on line.
kilowatt, shareholders
435
2022-44-25
Sunday, 25 September 2022 06:44 AM
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