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 among the utilities companies polled. Meeting projected supply needs will require an investment of US$13 trillion by 2030(a) 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.
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.
(a)According to the International Energy Agency/OECD World Energy Outlook 2005.