Stranded Asset Risk

Few challenges facing utilities carry as much financial weight as the stranded asset problem. Utilities operate on a business model built around long-term capital investments: power plants designed to run for 30-50 years, transmission infrastructure expected to last 40-60 years, and long-term contracts structured around full asset cost recovery. However, the accelerating energy transition – driven by declining renewable costs, tightening emissions regulations, and aggressive decarbonization mandates – is fundamentally disrupting these assumptions. Assets that utilities and regulators expected to operate for decades may need to retire years or even decades early, creating billions in unrecovered costs that must be absorbed by someone: utilities, ratepayers, or investors.