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Utilities Construction Output Shares – 2006/07
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This report is
a review of the Utilities sector, covering the performance in
the utilities themselves, but also the capital commitments to the
sector and the likely impact on construction output throughout the
sectors. Also covered is the Utilities Connections sector,
where there has been considerable change as a result of deregulation
in the industry, resulting in a more competitive, open market
The industry
has changed substantially in recent years, driven by privatisation,
consolidation and pressure from the regulators, particularly to
ensure that the market remains a competitive
one. |
The UK utility market is
now fully de-regulated with trading subject to the scrutiny of Government
utility regulators to ensure fair competition between suppliers, set price
limitations and ensure that the consumer receives a quality service.
During 2006 the value of
construction output in the four major utilities sectors rose by just under
2% from 2005, to a value of £3.3bn representing just over 50% of all
Infrastructure new work which also includes roads, railways and harbours.
2007 is expected to see a 4% increase year on year in terms of
construction output in the utilities sector.
Ongoing investment by
the utilities sector means that utilities continue to be a growth area,
with consequent contract opportunities for the construction industry.
Infrastructure is the third largest sector in terms of new work output and
is a sector which is likely to be further boosted by transport programmes
due for completion from 2009 onwards and significant new developments for
the 2012 Olympic games.
The
UK is no longer self-sufficient in energy terms and became a net importer
of gas both for consumption and power generation in 2006. There has,
therefore, been significant activity to increase the UK’s import
capability by National Grid and others. Also the government has set a
target of 10% of electricity supply from renewable energy by 2010.
Although the water and gas markets are considered to be relatively mature,
the electricity and telecommunications sectors still provide good
opportunities for expansion and increased market penetration and good
growth is expected in all core utility market sectors over the next five
years.
Utility companies are continuing to opt for mergers and acquisitions
in the quest for more stable cashflow as a source of finance for large,
capital intensive investments. Since the takeover of Scottish Power by
Iberdola in April 2007, only two of Britain's six big energy suppliers,
Centrica and Scottish and Southern Energy, remain independent.
The estimated value of the utilities connections
market is some £1.15bn in 2007. The market is expected to show reasonable
growth over the next few years, reflecting a positive housing and
construction market. Leading utility connections companies include
Integrated Utility Services, SSE, Connect, PN Daly, Core Utility, United
Utilities, Clancy Docwra and Telecom Plus. Electricity connections account
for a major part of the industry with a share estimated at just under 50%
by value.
AMA Research’s “Utilities
Construction and Connections Market UK 2008-2012” report is available
in hard copy or electronic format for £625 and can be ordered online at
www.amaresearch.co.uk
or by calling 0871 3103450. |
