Power Sector Overview
The power industry is responsible for the production and delivery of electrical energy in sufficient quantities via a power grid. Given the demand for electricity is uniform across all domestic, industrial and commercial operations, power is viewed as a public utility and basic infrastructure.
The electrical power industry is commonly split up into four processes, namely, electricity generation (e.g. power station), electric power transmission, electricity distribution and electricity retailing. In many countries, electric power companies own the whole infrastructure from generating stations to transmission and distribution infrastructure. For this reason, electric power is viewed as a natural monopoly and is thus heavily regulated.
There has been great concern over the past 2 decades about the scarcity of energy resources, and the need to focus on alternative fuel and renewable energy options. Despite environmental concerns, there hasn’t been much traction thus far for these ‘greener’ options. However, there are indications that renewable energy and distributed generation, which have typically been less cost effective, are finally becoming more viable in economic terms. Additionally, a diverse mix of generation sources reduces the risks of electricity price spikes.
The capital-intensive power industry suffered tremendous losses due to the economic recession. Industry analysts have revealed that there was a staggering 50% decline in the number, value and capacity of new projects between the beginning of the credit crunch in Q3 2008 and Q3 2009. There is a silver lining though, as analysts believe figures for Q3 2009 have shown signs of positive growth.
Going forward, it is believed the hotspots of activity will primarily be in India, China and the UK. As well as new builds, there are also significant opportunities for synergies across the global energy supply chain with industry and governments keen to invest in...