What's driving power bills?

Listed Infrastructure Equity at HSBC Asset Management

The Listed Infrastructure Equity team has been closely following the impact of the energy transition on the asset class. An important component of the analysis is the consumer and affordability, which we believe requires a detailed understanding of the wide range of factors that may have contrasting impacts on power bills. However, in recent years the evolutionary impact of the energy transition on power bills has been overshadowed by the shocks from the volatility of commodity and macro-economic variables. Different components of the bill have been impacted in different ways, as determined by market structures and regulatory frameworks in respective jurisdictions.

In this report we discuss how the prices consumers pay for energy are exposed to macroeconomic variables and commodity prices via its different components and how recent developments have had a wide range of impacts on bills depending on the characteristics of the jurisdiction in question. The US presents a fascinating case study given its variety of geographies, natural resources, energy transition policies, market structures and regulatory frameworks across the country. Following a recent research trip to a number of these regions we review the current opportunities and challenges, focusing on a group of diverse regions. As a result of this analysis and considering the views from our previous report on the drivers of the energy transition we see an upwards and more volatile trajectory for customer bills. However, we acknowledge there are a wide range of outcomes and also discuss potential disruptors that could alter this trajectory.

Read our report to find out more.