Five Scenarios for Our Electric Future

Five Scenarios for Our Electric Future

Ever wonder what Indiana’s electricity future might look like? Hoosier policy makers sure do, because Indiana’s economic profile is closely tied to electricity reliability and pricing – especially in manufacturing. Since the energy sector has been rapidly evolving, the state is getting proactive about our strategies. Part of that involves conceptualizing several possible directions where our state may head in terms of things like electricity production, consumption, regulation, and investment.

To build an idea of what possibilities may come, the Indiana Chamber of Commerce Foundation and numerous utility and corporate partners including Duke Energy, Vectren, NIPSCO, Subaru of Indiana, Walmart, and several others partnered to sponsor a wide-ranging study called Powering Indiana’s Economic Future. The research behind the report was conducted by London Economics International (LEI), which specializes in energy and infrastructure analysis. Their findings contained a look at where we are now and five key scenarios for how Indiana’s electricity future might play out.



Electricity prices have been growing steadily in Indiana for the last decade. Also, the composition of our electric generation portfolio has been shifting to new sources.

According to the LEI study, Indiana’s average electricity rates are growing more rapidly than the national average (2.9% increase per year from 2010-2019). Also, reliability is lower than national norms. Researchers said some of the reasons behind this growth and low reliability are flattening demand, replacing and maintaining aging infrastructure, and necessary investments to comply with federal environmental regulations.

Fortunately, LEI forecasts lower electricity price growth over the next decade than what was experienced in the past 10 years.

Significant shifts are happening in generation. Electricity generated by coal decreased from 93% in 2009 to 59% in 2019. The study finds that an additional 7.7 gigawatts of coal is expected to be retired by 2028. Growth is projected to continue in the areas of natural gas, solar, and wind generation.


Five Tomorrows. Possibly.

LEI researchers project there are five potential futures for Indiana’s energy sector. They include:

  • An enhanced status quo: Traditional utilities would remain the primary engine of new investment but would be subject to a regulatory structure with an increased incentives approach, as well as a strengthened mandate to consider alternatives to direct investment.
  • Distributed energy resource-centric: Distributed energy resources (DERs) are generation and storage methods that provide capacity close to the source (rooftop solar, wind, battery storage, and more). This future would build on the enhanced status quo, but would be focused on increasing opportunities for DERs, provided doing so does not result in cross subsidies.
  • Baseload preservation: This would incorporate the enhanced status quo but would also require utilities to include an assessment of plans for life extension and efficiency improvements at existing coal and nuclear stations.
  • Aggressive decarbonization: This would include all elements of the enhanced status quo and DER-centric pathways, as well as require Indiana to set a specific year to target reaching net zero emissions across the economy.
  • Competitive wholesale market: This would include elements of the enhanced status quo and DER-centric pathways, except that utilities would be required to unbundle their generation portfolios and competition would be introduced at both the wholesale and retail levels.


Which May be Best?

In LEI’s study, each future was assessed according to criteria such as its impact on reliability, affordability, predictability, and accessibility, and others. Based on that, the authors determined that a DER-centric approach might be the best option for Indiana.

On that subject, it’s worth noting that growth in DERs is projected to increase in the coming years. A different study conducted last year by Frost & Sullivan, a research and consulting firm, estimated the rate of annual investment in distributed energy resources (DER) will increase by 75% by 2030.


Futures Unfold

Indiana’s energy sector has a big impact on our economic success, so it’s no wonder why state officials would like to see projections on what the future might old. The only real thing for sure is that change is happening fast when it comes to our electricity needs and capabilities. Luckily, Indiana is learning all it can to stay ahead in the race.


By Nick Dmitrovich with data from LEI.