汇丰-能源转型：美国AI供电系列（三）：可负担性挑战-Powering AI–US(3)：The affordability challenge-20260326

HSBCGbanvetentRearch

26March2026

Equities

PoweringAI–US(3)

UnitedStates

Theaffordabilitychallenge

uUSresidentialpowerpriceshaverisenover25%inthepastfouryears,andtheEIAexpects3%growthpain2026/27

uWeseecostinflationasastrongdriver:keyequipmentisnow2-3xmoreexpensivethanitwasfiveyearsago

uExtremeweatherandaginggridscontributeto(disparityin)inflationacrossregionsandcustomersegments

Inpreviousreports,wewroteabouta

neweraofloadgrowthintheUS

andtheroledatacentresareplayinginit,aswellas

beneficiariesofthatgrowthinthepower

valuechain

.Inthisnote,weaddressaffordabilityconcerns.Arerisingelectricity

priceslinkedtorisingpowerdemandanddatacentres?

Weseecostinflationasastrongdriverofpowerpriceinflation:Thecostofkeypowerequipmentsuchascables,renewablesornewCCGThasrisen200-300%inthepastfiveyears.Othereffectsincludeelevatedgaspricesin2022orhigher

uraniumpricestodaythanin2020.Comparedto2020,changestosubsidies,tariffs,scarcity,riskperception,andhigherinterestratesandcommoditypricesaswellasgeneralinflationhavecontributedtothesehigherequipmentandconstructioncosts.

Extremeweatherandupgradesofaginggridscancontributetouneven

inflationacrossconsumersegmentsandstates:ElectricitypriceinflationhasnotbeenevenacrosstheUS.Forexample,extremeweather(suchaswildfires)and

aginggridshavecontributedtohigherratehikesinCaliforniaandtheNortheast.

Retailpriceinflationhasrunaheadofindustrypriceinflation,likelyduetothese

replacementsandextremeweather-relateddistributionnetworkinvestments.Therecanalsobespecificlocalizedreasonsforrisingtariffssuchnuclearcostoverruns.

DatacentrespayfortheirowngenerationviaPPAsandspecialtariffs:Ifdata

centresassumethecostofpowersysteminvestments–eitherupfrontviaconstructiongrants,viadatacentretariffs(thatalsohavevolumerequirements)andvia“bring(andpayfor)yourowngeneration”–thenretailtariffsshouldbering-fencedfromeffects.Inaddition,demandgrowthspreadscostoverawiderconsumptionbase.

Inthelongrun,shiftingtoelectricityischeaperthanfossilfuelsduetoefficiencies.Itisalsolessvolatileandlowersriskssuchasthosefromextremeweather:High

electricitypricesarenotthesameashighelectricityorenergybills.Further,electricity

pricesaremorestablethangasolineprices.IfUShouseholdsshiftconsumptionto

electricityviaelectricvehiclesandheatpumps,annualspendingforenergycouldfalltoUSD3,000-5,000by2050fromUSD5,400onaveragein2024(comprisedofcUSD3,000ongasoline,USD500onnaturalgasandcUSD1,900onelectricity.

ThisisourlatestreportontheEnergyTransitiontheme.Ifyouwanttosubscribetoanyofourninebigthemes,

clickhere

.

MeikeBecker*

SeniorGlobalUtilities&RenewablesAnalyst

HSBCBankplc

meike.becker@

+442079916441

CharlesSwabey*

GlobalUtilities&RenewablesAnalyst

HSBCBankplc

charles.swabey@

+442032683954

EvanLi*

Head,AsiaEnergyTransitionResearch

TheHongkongandShanghaiBankingCorporationLimited

evan.m.h.li@.hk

+85229966619

LilyannaYang,CFA

Analyst,LatAmOil&Gas,Utilities,Petrochems

HSBCSecurities(USA)Inc.

lilyanna.yang@

+12125250990

SamanthaHoh,CFA

SeniorAnalyst,CleanTech

HSBCSecurities(USA)Inc.

samantha.hoh@

+12125258783

DanielYang*

Analyst,AsiaEnergyTransition

TheHongkongandShanghaiBankingCorporationLimited

daniel.h.yang@.hk

+85229966976

SeanMcLoughlin*

SeniorGlobalIndustrialsAnalyst

HSBCBankplc

sean.mcloughlin@

+442079913464

HelenFang*

HeadofIndustrialsResearch,AsiaPacific

TheHongkongandShanghaiBankingCorporationLimited

helen.c.fang@.hk

+85229966942

NicolasCote-Colisson*

MD,HeadofGlobalTechPlatforms

HSBCContinentalEurope

nicolas.cote-colisson@

+442079916826

DaveyJose*

SeniorGlobalTechPlatformsAnalyst

HSBCBankplc

davey.jose@

+442079911489

PaulRossington*

SeniorGlobalTechPlatformsAnalyst

HSBCBankplc

paul.rossington@

+442079916734

*Employedbyanon-USaffiliateofHSBCSecurities(USA)Inc,andisnotregistered/qualifiedpursuanttoFINRAregulations

Disclosures&Disclaimer

ThisreportmustbereadwiththedisclosuresandtheanalystcertificationsintheDisclosureappendix,andwiththeDisclaimer,whichformspartofit.

Issuerofreport:HSBCBankplc

ViewHSBCGlobalInvestmentResearchat:

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2

PoweringAI–US:

Affordabilitychallenge

uAftermorethanadecadeoflowelectricitypriceinflation,residentialpowerpricesincreasedbyanaverageof6%pain2022-25

uFor2026and2027,theUSEnergyInformationAdministration(EIA)forecasts3%changepa

uWeseeinflation(general,capital,tariffs/subsidies,supplychain)andanaginggridasmaindrivers;extremeweatheralsoplaysarole

Inpreviousreports,wewroteabouta

neweraofloadgrowthintheUS

(PoweringAI–US,

13March)andtheroledatacentresareplayinginitaswellas

beneficiariesofthatgrowthinthe

powervaluechain

(PoweringAI–US(2),20March).Inthisnote,weaddressaffordability

concernslinkedtorisingpowerdemanddrivenbydatacentres.

Aftermorethanadecadeoflowelectricitypriceinflation,residentialpowerpricesincreasedbyanaverageof6%pain2022-25andarethusover25%highertodayversusYE2021.For2026and2027,theUSEnergyInformationAdministration(EIA)forecasts3%changepainits

January2026short-termenergyoutlook.

Powerpricesincreasedbyanaverageof6%pain2022-25

ChangeinUSresidentialelectricityprices(%)

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

6%

4%3%

1%1%

3%2%

1%

-1%

3%

-2%

6%

2%

6%

3%

5%

3%

2%

0%

2%1%

3%3%

Source:EIA

10%

10%

0%

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26March2026

3

Thus,USretailelectricitypriceshaverisenover25%sinceYE2021

USelectricityprices(centperKWh)

ResidentialCommercialIndustrial

20.0

18.0

16.0

14.0

12.0

10.0

8.0

6.0

4.0

2.0

0.0

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

Q12025

Q22025

Q32025

Source:EIA

AspowerpriceshaverisenwhiledatacentregrowthhasalsobeenattheforefrontoftheUS

electricitygrowthdebate,thelatterhasbeenlinkedtotheformer.However,whatdoweknowaboutthedriversofpowerprices?Thesecouldbeclassifiedintoonevolumecategoryandtwopricecategories:

1.Volume/use:Fromanindividualhouseholdperspective,thisincludeschangesindemand;climate;qualityofbuilding,appliancesandvehiclesorbehaviour.

2.Energysystemcostandwidereconomicdriversencompassthecostofpipes,wires,generationassetsandfuelsaswellastaxes,tariffsorinterestrates.

3.WhoPaysWhatreferstoallocationofcostandsubsidiesbetweenretail,commercialand

industrialconsumers.Itcouldalsoincluderegionallydifferingeffectssuchasextremeweather.

Volume/usage:ElectricitydemandintheUShasbeenflatforthepast10to25yearsandhasonlyrecentlystartedtogrow(c3%growthpain2023/24/25)fromawiderangeofdrivers.For

individualretailusers,electricitydemandcouldgoup(butoverallenergyusagewouldgodown)byswitchingfromICEstoEVsorgasboilerstoheatpumps.Electricitydemandcouldgodownviaanumberofefficiencyleverssuchasbuildingupgrades,moreefficientappliancesand

vehicles,newtechnologyforsmartandlowerusage,orbehind-the-metersolar/storage(usersgenerating/storingtheirownpowerratherthandrawingitfromthegrid).

Energysystemandwidereconomicdrivers:Supplychaincostshaverisenby200-300%inpowernetworksandgenerationequipmentcomparedto2020.Therearealsoothereffectssuchaselevatedgaspricesin2022orhigheruraniumpricestodaycomparedto2020.Weknowthatcomparedto2020,changestosubsidies,tariffs,riskperceptionandhigherinterestratesaswellasgeneralinflationhavecontributedtohigherequipmentandconstructioncost.

Whopaysforwhat:PriceinflationhasnotbeenevenacrosstheUS,andextremeweather(suchaswildfires)andaginggridshavecontributedtohigherratehikesinsomestates.Weknowthat

retailpriceinflationhasrunaheadofindustrypriceinflation,whichislikelyduetothese

replacementsandextremeweather-relateddistributionnetworkinvestments.Weknowthattherecanbespecificlocalizedreasonsforrisingtariffs,oneexamplebeingnuclearcostoverruns.WealsoknowthatdatacentrespayfortheirowngenerationwithPPAsandspecialtariffs.

Overall,thissuggeststhatvolumegrowthisunlikelytoexplainelectricitypriceinflationbeingabovegeneralinflation.Italsosuggeststhatexternalmacroeconomicandsupplychaincostinflationhavebeenstrongdriversofelectricitypriceinflation.Inaddition,ageofthesystem,

extremeweathereffects,andspecificone-offssuchaslargeprojectconstructioncostoverrunscancontributetopriceinflationanddifferingratesofinflationacrosscustomersegmentsandstates.

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1.PowerpriceinflationhasnotbeenevenacrosstheUS

Largepartsofthecountryhaveseenrisingpowerpricesinlinewithorslightlyaheadofgeneralinflation,butCalifornia(Pacific),theNortheast(NewEngland)andMid-Atlantichaveseen

higherincreases.InCalifornia,thisislinkedtonetworksandwildfire(prevention)cost,whileintheNortheast/Mid-Atlanticthisisduetohighnetworkupgradecost.Theseregionshave

traditionallyhadhighernetworkcosts,whichrosetoover32-38%oftotalelectricitycostin2023/24versusc25%intherestoftheUS.

PowerpriceinflationhasnotbeenevenacrosstheUS

NominalElectricitypriceincrease(2020-25,%)

55%

48%

38%

34%

34%

32%

33%

31%

27%

24%

generalinflation

New

England

Mid

Atlantic

SouthAtlantic

EastNorthWestNorthCentralCentral

EastSouthCentral

WestSouthCentral

MountainPacificHawaii/Alaska

Source:EIA

California,NortheastandMid-Atlantichavetraditionallyhadhighernetworkcosts

TransmissionandDistributioncostin%oftotalelectricitycost

50

45

40

35

30

25

20

15

10

2000200220042006200820102012201420162018202020222024

California

Northeast

Mid-Atlantic

RestofCountry

Source:RRF

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26March2026

5

2.Retailpriceinflationhasrunaheadofindustrypriceinflation

Industry(aswellasdatacentre)powerpricesaretypicallywellbelowretailpricesandoften

trackwholesaleelectricitypricesmorecloselyasitismorecostlytoservicethelargenumberofmuchsmallerretailclients,whichincludesthecostofdistributiongridstobringelectricityto

everyhouse.Taxesandleviesalsotendtobelowerfortheindustrialsegment.Above-averagecostinflationandinvestmentneedsinnetworkshavecontributedtohigherpriceinflationfor

retailcustomerscomparedtoindustrialcustomers,inourview.

Industrypowerprices…

USpowerpricespercustomer20.0segment(USDc/KWh)

15.0

10.0

5.0

0.0

ResidentialCommercialIndustrialDatacentres

Source:EIA

…aretypicallywellbelowretailprices(seeexhibitbelowforaGermanexample)

ElectricitybillcomponentsGermany(EURc/KWh)

TaxesOtherGridPower

ResidentialIndustrial

40

35

30

25

20

15

10

5

0

Source:BnetA

AnalysisofRevenueandExpenseStatisticsforMajorU.S.Investor-OwnedElectricUtilities(IOU)

suggeststhatcostroseacrossallmajorcategories,thoughgenerationcosts,whicharemorecloselytrackedbyindustrytariffs,roselessthaninothercategoriessuchasgrids.Generation&retail

showedastepupin2022,drivenbyhigherfuelandpurchasedpowercostduetobadweatherandaspikeingasprices.In2023and2024,generationandretailexpensesfellasUSgasprices

normalized.Yet,othercategoriessuchasnetworks,D&A,operationandmaintenanceortaxesandothercontinuedtorise.Thus,2022-24expensesatanaverageofUSD290bnarec14%higherthan2021expensesofcUSD250bn,orc25%aboveaverage2014-2020expensesofcUSD230bn.

Costroseacrossallmajorcategories,thoughgenerationcosts,whichismorecloselytrackedbyindustrytariffs,roselessthanothercategoriessuchasgrids

ChangeinIOUexpensestatistic(%)

2024vs2014-20avg2024vs202146%

25%

15%14%

Generation&RetailGridsOther(incl.taxes)Total

20%

11%

17%

18%

Source:HSBCaggregationofEIAdata

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26March2026

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Thus,2022-24expensesatanaverageofUSD290bnare25%aboveaverage2014-2020expensesofcUSD230bn

IOUexpensestatistic(USDbn)

350

300

250

200

150

100

50

0

20142015201620172018201920202021202220232024

Other(incl.taxes)

Grids

Generation&Retail

Source:HSBCaggregationofEIAdata

3.Highelectricitypricesarenotthesameashighelectricitybills

Regionswiththehigherpricestendtohavelowerconsumption;thus,thedisparityinelectricitybillsisnotaswideasitisinpricesacrosstheUS.

Highelectricitypricesarenotthesameashighelectricitybills

ElectricitypricesbillsandconsumptionbyUSregion(2024)

Mountain

WestSouthCentral

EastSouthCentral

SouthAtlantic

WestNorthCentral

EastNorthCentral

MidAtlantic

NewEngland

Pacific

Hawaii/Alaska

,

2814161315131414

1200

1000

800

600

400

200

0

consumption(avgkwhpermonth)bill(avgUSD/month)price(avgcent/kwh)

200

180

160

140

120

100

80

60

40

20

0

24

34

Source:EIA

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26March2026

7

4.Costinflationisastrongdriverofpowerpriceinflation

Costofkeyequipmentinpowerhasrisenby2-3xsince2020,duetoacombinationof

macroeconomicandsupplychainfactorsincludinggeneralinflation,highercapitalcost,tariffs,lowersubsidiesaswellasascarcitypremiumandriskpremiumforhigherpoliticaluncertainty.

uWeexpectthecostofrenewablesfor2030tonearlytriplethe2020level.In2019/20,solarPVandonshorewindPPApriceswereaslowas30-40USD/MWh.For2028-30e,aftersubsidiesend,includingtariffsandgeneralinflation,athigherinterestratesandhighermarginsfor

developers(riskandscarcity),weexpectPPApricestoriseto70-90USD/MWh.

uWeexpectpricesofgasturbinestomorethantriplefrom0.8USD/KWin2021to

2.8USD/KWin2030.Inaddition,fuelpriceshaverisen(suchasnuclearfuel)orcouldriseaccordingtotheEIA(HenryHubnaturalgasprices).

uThecostofkeynetworkcomponentssuchascables,transformersorswitchgearhasincreased200-300%since2021.

Costofnewwind/solarincreasedby2-3x(2030versus2020)

USPPAprices,USD/MWh

100

80

60

40

20

0

SolarWind

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026e

2027e

2028e

2029e

2030e

Source:LevelTen,HSBCestimates

CostofnewCCGTincreasedbyover3x

NewCCGTCAPEX(USD/KW)

2.8

0.8

2021

2030

Source:NextEra

Costofkeynetworkcomponentshasincreased200-300%since2021

Powernetworkkeycomponentinflationindex(Jan2018=100)

WireandCablesTransformer

SwitchgearCPI

350

300

250

200

150

100

Jun-18

Jan-18

Jul-25

Feb-25

Sep-24

Apr-24

Nov-23

Jun-23

Jan-23

Aug-22

Mar-22

Oct-21

May-21

Dec-20

Jul-20

Feb-20

Sep-19

Apr-19

Nov-18

Dec-25

Source:FederalReserveEconomicData,FederalReserveBankofSt.Louis

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8

5.Thereareotherdriverssuchaslargeprojectcostoverrunsandhigherfuelcost

Weknowthattherearevariousothereffectssuchasnuclearcostoverruns,higheruraniumpricescomparedto2020,elevatedgaspricesin2022,orbehind-the-metersolar(whichlowers

consumptionforowners,butspreadssystemcostfornon-usersoveralowerconsumptionbase).

CostoverrunsanddelaysinlargeutilityprojectscanincreaseutilityCAPEXwhiledelaying

benefits,thusposingupwardrisktoelectricitybills.GeorgiaPower’saverageelectricityratehasincreasedby33%inthepastthreeyearsaccordingtoGeorgiaPublicServiceCommission,

whichispartlybecauseofnuclearcostsoverruns.CostincreasedtoUSD35bnforVogtleunits3&4withoperationstartingin2023/24,insteadoforiginalestimatesofUSD14bnandoperation

startingin2016/17.

GeorgiaPower’saverageelectricityratehasincreasedby33%inthepastthreeyearspartlybecauseofnuclearcostsoverrunsandhigherfuelcost

EstimatedmonthlybillincreasesforGeorgiapoweraverage

50

45

40

35

30

25

20

15

10

5

0

residentialcustomers(USD)

45

7

10

4

5

16

3

2023rateincrease

Fuelcostbillincrease

2024rateincrease

PlantVogtleUnit4billIncrease

2025rateincrease

Total

PlantVogtleUnit3billIncrease

Source:SouthernEnvironmentalLawCentre

6.Datacentrespayforgenerationandgrowthspreadscostoverawiderbase

Ifhyperscalersassumethecostoftheinvestments,eitherupfrontviaconstructiongrants,via

datacentretariffs(thatalsohavevolumerequirements),and/orvia“bring(andpayfor)your

owngeneration”(BYOG),thenretailtariffsshouldbering-fencedfromeffects.Inaddition,

demandgrowthingeneral,andspecificallyfromdatacentres,helpstospreadcostoverawiderconsumptionbase.Therecouldalsobeefficiencyeffectsfromaninvestmentupcyclethat

combinesgrowthandreplacement.

Datacentrescouldevenlowerretailbills.Inadditiontopayingfornewgeneration,ifdata

centresparticipateinthecostofgridupgradesviaconstructiongrantsorifgridupgradecostispartofrenewablesprojectsandPPAs,thendatacentrescouldevenhavealoweringeffectonretailbills.TheCEOofGermanutilityE.ONstatedatitsFY2025resultsthatitisa

misconceptionthatdatacentresincreasebillsintheirarea.Inhisexample,asdatacentres

typicallypayforgridupgradesviaconstructiongrants,theeffectofspreadingcostoverawiderconsumptionbaseislargerthantheaddedcost.

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Bring(andpayfor)yourowngeneration(BYOG):isitbehind-the-meter,anddoesitfavourgas?

Bring(andpayfor)yourowngenerationinrelationtodatacentreshelpswithplanningandtheaffordabilitychallengewithanemphasison“payfor”yourowngeneration.

Likedatacentretariffs,BYOGreferstomodelsinwhichdatacentrespayfornewgeneration(andgridupgrades)thatresultfromtheirloadrequests.

Inaddition,BYOGcanrefertosomeonsitegenerationaspartofthesolution,butitistypicallynotreferringto100%off-grid,islandingorfullybehind-the-meter.Gasplants,batteries,

renewables,orfuelcellsonsitecanbepartofanoverallsolution,long-termorasabridgingmechanismuntilgridupgradesareready.However,itishighlyimpracticalforlargeloadsandunlikelytobefullyoff-gridatscale.

Datacentretariffsincludevolumeandotherrequirementstoprotectretailtariffs

Utiity

cst

USDMWh

Min.

capacity

MW

Min.Lad

Factr

%

Min.Termyears

Min.

Biing

%

Term

Ntice

AndFees

catera

FPL

USD82

peerA

USD89

peerB

USD72

peerc

USD83

peerD

USD68

peerE

USD88

peerF

USD108

peerG

USD107

peerH

USD89

peer

USD72

Limitedcustomerprotections

Somecustomerprotections

Strongcustomerprotections

Source:NextEra

7.Thelonggame:Electricityischeaperduetoefficiencies

Lookingatpowerpricesisonespecificlens,whichisnotthesameasoverallelectricitybills,totalenergybills,orall-incostincludingclimatechangeandotherrisks.

EPRIestimatesthattheaverageUShouseholdspentUSD5,530onenergyin2024betweengasoline,naturalgasandelectricitybills.AtamedianhouseholdincomeofcUSD84,000in

2024,energycost(includingtransportation)represented6.6%ofhouseholdincome,whileelectricitycostalonerepresentedc2%.

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Electricitycostalonerepresentsc2%ofmedianhouseholdincome

2024AverageUShouseholdcostforenergyincludingtransportation(USD)

Gasoline,2930,53%

Electricity,1860,34%

Other,255,4%

Naturalgas,485,9%

Source:ERPI

Whileenergyorelectricitycostisnotahugeincomecategoryfortheaveragehousehold,thisdoesn’tcapturetherealaffordabilitychallenge,whicharisesforlowerincomehouseholdsthatcanspendmorethan10%oftheirincomeonenergy.

Further,whileUSelectricitypricesareverystable,gasolinepricesarenot,andaspikeingasoline

pricesin2026wouldlikelydramaticallyraisetheoverallenergyaffordabilitychallengeforUS

households.OurHSBCOilsanalystsseeaspikeinBrentpriceandUSgasolineretailpricein2026.ThisincreaseismainlydrivenbytheeffectiveclosureoftheStraitofHormuzsince28February

(see

Oilmarkets

,20March2026)andpremisedonthescenarioofone-monthclosure).

USDgasolineretailprice(USD/gal)andWTIprice(USD/b)

5.0

4.5

4.0

3.5

3.0

2.5

Mar-22Aug-22Jan-23Jun-23Nov-23Apr-24Sep-24Feb-25Jul-25Dec-25May-26Oct-26

USretailgasoline(USD/gal)WTI(RHS,USD/b)

120

110

100

90

80

70

60

50

Source:Bloomberg.HSBCassumptions

Whenitcomestoelectricity,investmentsforreplacementsorlifetimeextensions,modernizationorweatherhardeningarenecessaryinanagingpowersystemandcanimprovequality,

generateefficiencygains,andlowerfuturecost/risk.Inthecaseofnetworks,non-growthinvestmentcategoriesencompass50-70%ofplannedelectricitygridinvestments:

u26-28%toreplaceanageinggrid;

u5-10%tomodernize;and

u15-25%toincreaseresilienceagainstmoreextremeweather.

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Electricitygrowthinvestmentsshouldbemitigatedbyabroaderconsumptionbaseandlikely

addtoefficiency(asabroaderinvestmentprogramacrossgrowthandreplacementislikely

moreefficient).Further,electricitygrowththatreplacesfossilfuels(suchasEVsorheatpumps)resultsinlessexposuretovolatilityforhouseholds:electricitypricesthatinclude67%ofnon-

fuelcostaremuchmorestablethangasolineprices.Costoffuelandpurchasedpower,whicharelinkedtohistoricallyratherstableUSHenryHubgasprices,comeinata33%shareoftotalIOUexpenses,itslowestlevelinthepasttenyears.

CostoffuelandpurchasedpowerasashareoftotalIOUexpensescomesinat33%in2024,itslowestlevelinthepasttenyears

Costoffuelandpurchasedpoweras%oftotalIOUexpenses

44%

2022

44%

2014

38%

2015

38%

2021

37%

2016

36%

2018

36%

2023

36%

2017

34%

2019

34%

2020

33%

2024

Source:HSBCaggregationofEIAdata

Inaddition,directuseofelectricitysavescostviaefficiency:asc30-40%ofenergyislostintheprocessofburningfossilfuels(beitinICEs,gasboilersorpowerplants),ashifttorenewablesanddirectuseofelectricitybringshugeefficiencygains.Forexample,ifhouseholdsshift

consumptiontoelectricityviaelectricvehiclesandheatpumps,annualspendingforenergy

couldfalltoUSD3,000-5,000by2050(fromUSD5,000-6,000in2024),areductionof24-43%.

TheaverageUShouseholdsspentUSD5,000-6,000onenergyin2024Householdenergywalletforseletectedstates(USD,2024)

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

MANJOhioMNFLTNTXCOCA

gasolineother

gas

solar

electricty

Source:EPRIestimates

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Withconsumptionshiftingtoelectricity,thiscouldfalltoUSD3,000.5,000by2050asthedirectuseofelectricitybringshugeefficiencygains

Householdenergywalletforseletectedstates(USD,2050)

6000

5000

4000

3000

2000

1000

0

MANJOhioMNFLTNTXCOCA

gasolineother

gas

solar

electricty

Source:EPRIestimates

Householdscouldsave24.43%intotalenergycostwiththisshift

Reductioninhouseholdenergywalletforselectedstates(2024-50)

-27%

-39%

-43%

-22%

-30%

-22%

-29%

-42%

-24%

MANJOhioMNFLTNTXCOCA

Source:EPRIestimates

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13

Disclosureappendix

AnalystCertification

Thefollowinganalyst(s),economist(s),orstrategist(s)whois(are)primarilyresponsibleforthisreport,includinganyanalyst(s)whosename(s)appear(s)asauthorofanindividualsectionorsectionsofthereportandanyanalyst(s)namedasthecoveringanalyst(s)ofasubsidiarycompanyinasum-of-the-partsvaluationcertifies(y)thattheopinion(s)onthesubjectsecurity(ies)orissuer(s),anyviewsorforecastsexpressedinthesection(s)ofwhichsuchindividual(s)is(are)namedasauthor(s),andanyotherviewsorforecastsexpressedherein,includinganyviewsexpressedonthebackpageoftheresearchreport,accuratelyreflecttheirpersonalview(s)andthatnopartoftheircompensationwas,isorwillbedirectlyorindirectlyrelatedtothespecificrecommendation(s)orviewscontainedinthisresearchreport:MeikeBecker,CharlesSwabey,EvanLi,LilyannaYang,CFA,SamanthaHoh,CFA,DanielYang,SeanMcLoughlin,HelenFang,NicolasCote-Colisson,DaveyJoseandPaulRossington

Importantdisclosures

Equities:Stockratingsandbasisforfinancialanalysis

HSBCanditsaffiliates,includingtheissuerofthisreport(“HSBC”)believesaninvestor's