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Electricity Monthly Update

With Data for June 2023 Release Date: August 24, 2023 Next Release Date: September 26, 2023

Highlights: June 2023

Key indicators

Independent power producers continued to expand their share of U.S. net generation in 2022

Data source: U.S. Energy Information Administration, Form EIA-923, Power Plant Operations Report.

In 2022, the U.S. electric power industry generated 4.3 million gigawatthours (GWh) of electricity, a record high. This output came from thousands of electric power plants owned by hundreds of different companies and organizations. Although plant owners differ individually, we group them into several categories to help describe the industry. Two of those categories—electric utility companies and independent power producers (IPPs)—dominate plant ownership, accounting for about 95% of the power generated every year. Data from the past 10 years show a continued trend of steady growth in market share of IPP-owned generation and steady decline in market share of electric utility-owned generation.

An electric utility is an entity that generates, distributes, and sells electricity to customers, usually within a designated franchised service area. IPPs are non-utility generators that generate electricity for sale primarily to an operator of an electricity network.

Power generation by the two major ownership groups has been changing gradually over the past 10 years. Electric utilities, which remain the largest generators of electric power, have witnessed a steady decline in output and market share, falling from 2.4 million GWh and a 59% share in 2013 to 2.2 million GWh and a 52% share in 2022. The decline has been more than offset by a rise in output from plants owned by IPPs, which rose from 1.5 GWh and a 37% share in 2013 to 1.9 GWh and a 43% share in 2022.

The shift in net generation market shares has been the result of several changes in the electric power business. After the deregulation of electric power markets in certain states in the late 1990s and early 2000s, IPPs began acquiring and building more power plants as these firms pursued business opportunities from the sale of electricity. Conversely, many electric utility companies chose (and some were required as part of deregulation) to focus more on the transmission and distribution of electricity to customers and to avoid the risks associated with operating power plants. Another driver behind these changes has been the introduction and expansion of new generation technologies. For the most part, these new technologies have been at installations that use wind, solar, geothermal, and other renewable energy sources. IPPs have been more active with building renewable energy resources than traditional electric utilities.

Data source: U.S. Energy Information Administration, Form EIA-923, Power Plant Operations Report.

Electric utilities have changed the makeup of their power generation, mostly shifting to more natural gas and away from coal. Over the past 10 years, coal’s share has been almost cut in half due to a combination of retirements (70 gigawatts of coal-fired capacity was retired) and the running of remaining coal fleets at lower rates. Use of nuclear and hydroelectric sources remained about the same, even with very little new capacity built. Electric utilities reported modest increases in power generation from renewable resources. The share of wind output reached 4%, and the share of solar output reached 1% in 2022 as electric utilities used power purchase arrangements to source electricity from renewable generators operated by IPPs and then distributed that power to their customers.

Data source: U.S. Energy Information Administration, Form EIA-923, Power Plant Operations Report.

IPPs own a more diverse mix of generation sources, based on a business strategy of meeting electricity demand from multiple sources. Generation from renewable sources, mostly from wind and solar sources, has about doubled over the past 10 years and now accounts for more than a quarter of the total share of IPP generation. At the same time, IPPs have shifted their portfolio of generation sources more to natural gas and away from coal, which never represented as large a share of their generation portfolio as it did for electric utilities. IPPs commonly own nuclear generating assets but own practically no hydroelectric capacity.