Abstract
Bridging the Gap between Required and Planned Infrastructure Will Call for
Huge Investment
Utilities in the United States face the pressing task of expediting
transmission and distribution (T&D) infrastructure investment. This is a
formidable challenge considering that many of them have either gone bankrupt or
are struggling with severe cash crunches. Upgrading investment in generation as
well as in the construction of new T&D facilities is, however, critical for
utilities since much of the existing infrastructure is operating beyond its life
expectancy. Transmission failures are increasing and becoming a serious issue
for senior management of utilities and regulators. Rising issues of reliability,
therefore, are compelling utilities to prioritize infrastructure investment.
The Frost & Sullivan research, U.S. Electrical Transmission and
Distribution Services Market, provides a comprehensive analysis of the major
drivers and challenges facing this market. This analysis helps identify emerging
opportunities for revenue expansion in T&D services and helps participants
devise strategies to meet the various challenges. Detailed revenue comparison by
market segments helps service providers and vendors understand the competition
in each segment.
Increasing Trend toward One-Stop Energy Solutions
A trend observed among utilities and large engineering firms is the growing
shift in focus from individual specialized services to
engineering-procure-construct (EPC) services. Initially, they are expected to
outsource the bulk of their non-core services in T&D – such as
engineering design, drawing, drafting, metering reading, and line work line
repair – to outside firms. Eventually, they are likely to outsource this
work to a single party to raise productivity and accountability and to improve
efficiency in administration and dispatch.
"Utilities are increasingly inclined to hand over the entire project to
EPC contractors so that it can be built on time and under a pre-determined,
explicitly defined budget," says the analyst of this research. "This
transfers the scheduling and cost risks into the hands of the provider, allowing
the utilities to focus on core functions and on diversifying their portfolio of
services to retain and expand market share."
Regional Service Providers Remain Confined to Specific Regions
Small, regional service providers are competing with their larger
counterparts that have a national presence by virtue of their attractive pricing
and good relations with utilities. Additionally, they enjoy the benefits of easy
mobility within a limited region and a common regulatory purview. "However,
while this ensures sustainability in the short term, it does not guarantee
long-term volume business for these service providers," says the analyst.
"Although willing to diversify, these small companies continue to find it
difficult to expand and compete with the national participants."
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