Controlling Costs and Gaining Scale in Energy & Utilities (Market Focus)

Publication Date	October 2006
Publisher	Datamonitor
Product Type	Report
Pages	11
ISBN Number	not applicable
Product Code	DAT04202

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Summary

Introduction

The US and European utility markets are host to a multitude of pressures including intense competition for customers, regulatory stipulation and uncertainty over security of supply. To combat these challenges and secure future survival, utilities need to build scale while maintaining shareholder returns. Importantly, their challenge is to execute activities around these while controlling cost.

Scope

Discussion of the rapidly changing global utility market
Examination of the specific market drivers and inhibitors that influence the ability to scale.

Highlights

The rapid change in the global utility market promotes cost control to ' primary motivator'. Vendors should be aware of how they can position their solutions within this context since controlling costs is a key motivator and throttle to all utilities activities.

Reasons to Purchase

Understand the current market pressures within the global utility market.
Explore the main drivers for IT development for utilities in 2006

Content

Catalyst
Summary
Methodology
- AnaLYSIS
- Global utility markets are undergoing rapid change
- Regulation is having a major effect on the dynamics of the global utility market
- Financial scandal raises financial reporting burden on utilities
- Deregulation is driving competition- to a degree
- Concerns over climate change are driving environmental regulation
- Cost of operations for utilities has become critical due to the need for significant investment in new and existing assets
- Gas generation and supply is becoming costly
- Aging networks drive the need for significant investment
- Retail systems need to improve to manage customer interactions effectively and improve customer service
- Rapid change affords new opportunities and also drives protectionist strategies.
- Utilities can become vertically integrated to exploit new opportunities and protect for the future.
- Horizontal integration allows utilities to expand their product offering
- Geographical expansion also offers new opportunities for market expansion
- Financial strength is the key to facilitating utility scaling strategies
- Specific market drivers and inhibitors influence the ability to scale
- Regulation is driving confidence, competition and new types of generation, but at a price.
- Corporate America introduces new financial accounting regulations to increase market confidence
- Regulation /deregulation has created competition to a degree
- Environmental pressure leads development of renewable energy generation but is costly
- The cost of developing generation, delivery and customer service infrastructures tempers the ability to gain scale
- Scaling utilities need increased capacity in the face of rising generation costs
- Costly delivery infrastructure is needed to enable new market entry
- Investment in innovative retail systems allow improved visibility and customer service
- New market opportunities present scaling opportunities
- Vertical integration affords new opportunities and protection in a volatile market
- Deregulation presents new market opportunities via horizontal expansion
- The rapid change in the global utility market promotes cost control to 'primary motivator'
- Utilities place significant importance on 'cost control'
- Unprompted, utilities stated cost control is a ubiquitous element in all activities
- Primary business drivers and key IT influencers again hinge on cost
Appendix
- Definitions
- H1
- Extended methodology
Further reading
- Ask the analyst
List of Tables
- Table 1: Business Goals for utilities in 2006 ( Average Score 1= low priority, 4 = high priority )
- Table 2: Key IT drivers for utilities in 2006 ( Average Score, 1= low priority, 4 = high priority )
List of Figures
- Figure 1: Business goals for utilities in 2006 ( Average Score, 1= low priority, 4 = high priority )
- Figure 2: Key IT drivers for utilities in 2006 ( Average Score, 1= low priority, 4 = high priority )