Utilities / Energy
Utilities (water, electricity and gas) are essential services that must be in place as part of any industrialized nation’s infrastructure, and their presence (along with type and abundance) play a vital role in any country’s economic and social development. Having a strong Utilities base, particularly one involving power, provides part of that infrastructure required to support diverse industries and fuel growing businesses.
Because Utilities themselves require significant infrastructure that must be kept current to remain effective, these companies often carry large debt loads, particularly those that supply power. The capital investment required is enormous, and this market demand is but one of the many challenges currently facing the power industry as a whole. Within the United States alone, capital expenditure requirements are expected to exceed $100B annually through 2020. This represents an increase of 100 percent over the annual costs of the early 2000’s, according to Edison Electric Institute. For years the industry spent relatively little to upgrade basic infrastructure, much of which dates back to the 1970’s or 1980’s. Aging assets now must be repaired or replaced, and even more so when considering needed improvements tied to smart grid technology and more stringent environmental standards.
As regional and global economies continue to develop quickly, the challenges faced by the power industry will only amplify. Demand for petroleum, coal, gas, and nuclear power is growing, particularly in Eurasia with China leading the way followed by India and Turkey. Longer term projections show that across energy sources, per-capita consumption in North America and Europe is likely to fall as consumption rises in these other regions.
Adding to an already complex market is growing demand for more non-traditional sources, particularly in the US. New technology is constantly making previously discounted methods more accessible, and this represents a huge capital investment paradigm for industry players. Existing companies are having to adapt to a changing landscape being reshaped by the merging of diverse and changing consumer preferences, technology innovation, increasing regulatory demands, and an undercurrent of sustainability and cleaner energy. Key trends with which US providers will contend will be:
– Increasing capital expenditures and costs for aging infrastructure needs and smart grid technology,
– Increased regulatory compliance,
– Moderating demand along with efficiency, conservation, and management efforts,
– Natural gas fuel cost relief from shale gas discoveries and replacing coal/oil energy,
– Post M&A activity to enhance economies of scale and scope, and
– Technology and innovation for both providers and consumers, to include solar and wind energy.
The Utilities and Energy industries have changed rapidly in recent years in trying to meet the increased demand placed on them by businesses and consumers, and these demands will continue to increase. At Synergetics we see challenge and opportunity in equal measure. We will share the experience of our insights gained from the numerous partnerships we have forged with domestic and global organizations. With your management team, we can tailor an approach that best meets the energy issues which your business faces.
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