The global utilities industry grew at a Compound Annual Growth Rate (CAGR) of 4% during the years 2011-2015, propelling it to a value of $4.2 trillion, according to the latest Utilities Global Industry Guide published by research firm MarketLine. This figure is the total revenue that electricity, gas, and water utility companies generate from sales of their products to end-users, ranging from households to heavy industry.
MarketLine’s latest report states that the global growth rate is moderate, but masks a great deal of variation from region to region. Asia-Pacific accounts for almost two dollars in every five spent on utilities worldwide, and its market grew at a CAGR of around 8%. This reflects the huge and growing appetite for energy in countries such as China.
Among the developed economies, the United States is by far the most lucrative market, with 2015 revenues equivalent to more than 20% of the global industry value. However, its growth rate was sedate, barely exceeding 1% a year on average.
Mike Toohey, Analyst for MarketLine, comments: “There is a well-established correlation between energy use and economic activity, meaning the top-level data and trends are unsurprising.
“Where things get interesting is that some countries are showing a different trend. For example, Germany decreased its electricity consumption volumes, even in years where its economy grew. This is due to factors including greater energy efficiency in domestic and industrial equipment, and higher volumes of self-generation from renewables.
“Thus the future may not always resemble the past, and our research into the top 10 power companies shows that the major utilities are well aware of the ways their industry is changing.”
MarketLine’s report also indicates that the extent of market liberalization has a strong effect on the degree of rivalry experienced by leading players. Companies operating in the liberalized markets of Western Europe experience more competition than the state-owned monopolies that dominate in South Korea or Taiwan. Although large companies dominate in most countries, the ability of end-users to switch gas and power suppliers freely means that smaller players can grow their market share, and customer churn can be a significant problem for the major energy retailers.