It is often argued that that business works best without government
regulations, but yet the same firms who want little or no regulation want
government to make it easier for them to do business, say, in countries they
can’t easily operate in, like Iraq, Iran and Nigeria.
World Energy Leaders Braced for
Revolutionary Change Within the Industry
Price
Waterhouse Coopers, 11 April 2006
LONDON - The utilities industry is facing its
biggest challenge in modern times according to the eighth annual PricewaterhouseCoopers
report ‘The
Big Leap: Utilities Global Survey 2006’. According to the report, two-thirds of the world’s leading
utility company leaders hold this view with the majority rating the changes
that the industry will have to undergo as little short of revolutionary. This
sentiment is felt most strongly in Europe (72%), which is grappling with
conflicting challenges including supply and demand imbalances, infrastructure
vulnerability and environmental concerns.
The industry is ready to make a big leap forward with nearly two thirds believing the industry
needs to adopt a 10 year focus on reducing environmental damage, developing new
technologies, improving customer service relationships and finding new fuel
sources.
However, many feel that policy-makers also have to make a leap. 80% of
respondents believe political and regulatory factors are inhibiting the ability
of the sector to respond to these challenges, and shock factors such as supply
or environmental crises may need to occur to force change.
The report which presents the views of
116 senior executives from leading utilities companies in 43 countries reveals security of supply remains their
primary concern as it has over the last two years, particularly in Europe where
twice as many utility leaders believe prospects for power cuts have increased
rather than diminished compared to five years ago. Many within the industry
believe the pace of change needs to be stepped up to face the challenges that
lie ahead. 42%, for example, said the sector is lagging behind in the
development of renewable energy sources.
Regulatory uncertainty continues to affect investment in the sector and was
cited as one of the top three concerns amongst the utilities companies polled. Meeting projected supply needs will require
an investment of US$13 trillion by 2030* in power generation, transmission and
distribution and gas-supply infrastructure yet 42% of respondents felt that
government or regulatory policy restricted their ability to develop long-term
plans.
Manfred Wiegand, Global Utilities Leader, PricewaterhouseCoopers said:
“Our report highlights yet again the need for the industry to work with
government and investors to make the infrastructure, technological,
environmental and investment leaps that need to happen to arrive at a long term
sustainable solution.”
Looking ahead Manfred Wiegand commented:
“We can expect to see a future power and gas utilities sector that is radically
different from now. On the ownership and sector structure front, we will see
many fewer and much larger super-regional generation and distribution
companies, greater fusion of upstream and downstream energy and a continued
move of infrastructure entities into private investment fund ownership. On the
customer front, we will have the prospect of much greater end-user involvement
in both industrial-scale power projects and smaller and more medium-sized
distributed power.”
Across all of the industry, technology will be a key driver and investment in
technology, particularly in clean coal generation, will be a key determinant in
the extent to which greenhouse gas growth is mitigated. Coal and nuclear will
play a larger part in the fuel mix. Finally, many in the industry feel there is
the very real prospect of ‘cap and trade’ emission control schemes being
extended around the world.
The PricewaterhouseCoopers ‘The Big Leap’ report also highlights other key
developments in the utilities sector:
- M&A
activity at record levels: Both the value of total deals and the size of deals are at record
levels. Total deal value soared to US$196bn in 2005 from US$123bn in 2004.
- Coal tops
favoured fuel supplies: Coal ranks alongside gas as the fuel expected to make the biggest
contribution to meeting demand growth in the next five years.
- Nuclear ready
to step up: Half of the respondents in the Americas and Europe and 44% of all
respondents said they expect nuclear capacity to increase in their region
as a result of concerns about climate change.
- Technological
advances:
Companies are increasingly looking to technological innovation to deliver
efficiencies and respond to the pincer of future demand challenges and
environmental concerns.
Notes to Editor:
*According to the International Energy Agency/OECD World Energy Outlook 2005.
1. The Big Leap: Utilities Global Survey 2006
is a major survey of boardroom opinion inside utility companies conducted
annually by PricewaterhouseCoopers.
2. This year, for the first time, the survey focuses on the sector’s viewpoint
about the changes needed to meet the challenges ahead. The report summarises
the changes that are being made or need to be made in technology, investment,
M&A, efficiency, cleaner fuels and customer relationships.
3. It includes data from 116 senior executives, from 98 utility and utility investor
companies across 43 countries. Research covers Europe, the Americas,
Asia-Pacific, Africa and the Middle East. The majority of utility participants
were senior Vice Presidents and Presidents, CEOs and other senior managers.
4. The PricewaterhouseCoopers
Global Energy, Utilities and Mining Group is the
professional services leader in the international energy, utilities and mining
community, advising clients through a global network of fully dedicated industry
specialists.
5. The member firms of the PricewaterhouseCoopers network
provide industry-focused assurance, tax and advisory services to build public
trust and enhance value for its clients and their stakeholders. More than
130,000 people in 148 countries across our network work collaboratively using
Connected Thinking to develop fresh perspectives and practical advice.
"PricewaterhouseCoopers" refers to the network of member firms of
PricewaterhouseCoopers International Limited, each of which is a separate and
independent legal entity.
http://www.pwcglobal.com/extweb/ncpressrelease.nsf/docid/0B69A1A794832C5385257147004FEAF3
