Stock Strategist: Electricity Demand's COVID Comeback

[Morningstar Logo]( [Company Site]( [Company News]( [Membership]( [Portfolio]( [Stocks]( [Options]( [Funds]( [ETFs]( [Markets]( [Tools]( [Personal Finance]( [Discuss]( Stock Strategist Electricity Demand's COVID Comeback Utilities should benefit as the U.S. economy electrifies. [tab_bar] by Travis Miller | 11/23/2020 5:30:00 PM The coronavirus pandemic hit utilities hard. U.S. electricity demand is set to fall nearly 3% this year, creating a stiff financial headwind for most utilities. In April and May, at the peak of the COVID-19 restrictions, electricity demand fell 5.8%, the largest two-month drop in 50 years of recordkeeping. Commercial and industrial demand is down more than 10%, a big hurdle for utilities in the Midwest and South to overcome. Higher residential lighting, air conditioning, and electronics use due to working from home, e-learning, and unemployment has brought some relief. Electricity demand has decoupled from economic trends during the last decade, but the pandemic shows that the economy still matters. We forecast 1.2% average annual U.S. electricity demand growth through 2030, down slightly from our 1.25% average annual growth estimate published two years ago. The pandemic upended most energy forecasts, including ours, which is the primary reason our forecast is lower. Still, we remain more bullish than most industry forecasts even while assuming that energy efficiency remains a fierce headwind. Electricity is set to take share from other energy sources, such as coal, oil, and eventually natural gas. This offers utilities long-term infrastructure investment opportunities, supporting our 5.5% annual earnings growth outlook for the sector. To read more, click [here](. Sponsored Links [Buy a Link Now]( Podcast: Investing Insights From Morningstar.com Listen to a roundup of the latest videos featured on Morningstar.com [in this podcast]( available through iTunes. Free Issue | Morningstar's Stock Newsletter >> Morningstar StockInvestor is celebrating more than 10 successful years of high-quality stock investing. Its two real-money portfolios have outperformed the S&P 500 since 2001. [Get new ideas for the core of your stock portfolio.]( Search Most Recent Articles [Rocky Road for Roku?]( [Gender Diversity on Corporate Boards Is Good for Investors]( [Tesla Finally Joins the S&P 500]( Latest Analyst Reports [Lowe's Companies]( [Atmos Energy]( [AbbVie]( [Prudential]( [Workday]( ABOUT OUR EMAIL To unsubscribe and update your preferences, go to our [email newsletter page](. All subscription changes will take effect within one business day. If you have questions about Morningstar.com or your membership, send a note to premium@morningstar.com. ABOUT OUR PRIVACY POLICY Please [click here]( to learn about Morningstar's privacy policy. (c) Copyright 2020. Morningstar, Inc. 22 W. Washington Chicago, Illinois, 60602 All rights reserved.