Utilities Industry Report

The global utilities industry is a trillion-dollar sector experiencing historic growth due to technological advancements, growth in emerging markets, easing of government regulations, and lower barriers to entry. The market is expected to continue to grow as demand expands, different energy options become more widely available, and innovation drives change.

Market Segmentation

The utilities industry is segmented by type into the following categories:

• Water and Sewage
  • Water Supply and Distribution
  • Wastewater Treatment
  • Stormwater Management
• Natural Gas
  • Natural Gas Transmission
  • Local Gas Distribution Companies (LDCs)
  • Natural Gas Storage
• Electric Power Generation
  • Power Generation (Renewable, Fossil Fuels, Nuclear)
  • High Voltage Transmission
  • Electric Distribution Systems
• Transmission
• Distribution

By operator type:

• Public Operator
• Private Operator

By pricing:

• Fixed Billing
• Variable Billing

Key Growth Drivers & Market Trends

There is rapid investment growth in the renewable power generation sector, which continues to drive positive opportunities in the utilities market. Many power companies are looking to renewable energy sources, specifically in the United States and Europe. This includes investment into the development of power grids, nuclear power, energy storage, electric vehicles, low-emission fuels, efficiency improvements, and heat pumps. Grid modernization is an ongoing need to address aging infrastructure and reduce energy load, so utility companies will continue to invest in upgrades to handle increased demand, accommodate more renewable energy sources, and enhance reliability.

There is also growing demand for electricity around the world, which is expected to drive further growth in the utilities space. Electricity is essential for powering many electrical devices and systems, so electric companies must be fully equipped to ensure a reliable and consistent supply of power to homes and businesses, a factor that means demand continues to grow. Additionally, electricity prices are expected to rise due to increased demand and reduced supply of generation. It is also important to note the growing need for security measures to protect systems from evolving cyber and geopolitical threats, as well as preparation and response for natural disasters, which is becoming more significant as major storms have become more common around the world.

Digital technologies are becoming a more significant focus in the utilities industry. Artificial intelligence (AI) is being used more widely to control costs and improve efficiencies. These technologies are being utilized in the areas of power generation, transmission, and distribution to boost productivity, efficiency, and safety within power plants. Smart grids, sensors, and smart meters are making it possible for both companies and consumers to access more accurate and real-time power usage data. Such advancements are helping to increase productivity, efficiency, safety, compliance, and reliability in power generation and distribution. The result is improved asset management, planning, and execution. There is also a speedier level of service that translates to better customer satisfaction. 

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Additionally, major players in the utilities sector are focusing on developing imaging technology to gain a competitive advantage in the market. Imaging is now a critical part of the utility services industry, enabling the assessment of infrastructure and the detection of faults, thereby making electrical operations more efficient and reliable.

M&A

There is a bright future for M&A in the utilities sector. Opportunities will continue to stem from the need for reliable and sustainable energy infrastructure. Companies that have a clear strategy for a more sustainable future can expect to attract investors and thrive in today’s modern, evolving energy space.

M&A in the area of renewable energy is expected to remain active, with companies buying up renewable assets and investing in infrastructure that supports green hydrogen, electric vehicles, and grid modernization. A global shift toward decarbonization is also driving M&A activity. This includes solutions for battery storage and battery creation via critical minerals, such as lithium, cobalt, and nickel. This is driving mining deals in various regions around the world.

As various countries are making reliable and diversified energy supplies more of a priority amid geopolitical tensions and shifting alliances, energy security is an essential driver of M&A strategies. Fossil fuel investments are key to strengthening domestic energy independence. And many countries continue to work to reduce reliance on imports. With such ongoing dynamics, more cross-border deals within the areas of natural gas, nuclear power, and critical infrastructure assets are likely to be achieved.

There is also an unprecedented demand for energy-intensive data centers, driven by the rapid adoption of AI, cloud computing, and digital transformation. This is opening up new opportunities for unique partnerships and deals that secure power supply for facilities, data centers, and other power infrastructure needs. Smart grids and energy management systems are also seeing increased investment due to a need to improve efficiency and resilience.

More companies are looking to create synergies to address shifting energy needs, which means that the lines between energy, utilities, and resources are continuing to blur. Tech firms are investing in renewables and energy storage for data centers. Traditional energy companies are acquiring digital innovations to enhance their operations. Industrial companies are teaming up with energy companies to secure reliable power and decarbonize their manufacturing processes. Such levels of convergence are continuing to create innovative partnerships, meaning that M&A activity will keep transforming traditional industry parameters.

It’s not uncommon for M&A deals to fall through or to see the expected value of the transaction because of ineffective transition and integration processes, especially in the utilities sector. Utility stakeholders should seek the partnership of an M&A expert to help them rethink their approach to corporate reorganizations, thereby protecting their bottom lines and ensuring they can continue to serve their customers best. This means having key strategies in place to provide a clear vision and like-mindedness between all parties involved in all phases of a transaction.

Our Recent Success Stories in the Sector

Some of Benchmark International’s more recent successful deals in the energy, resources, & utilities space include:

• The sale of Deluxe Plumbing & Heating to Homex Services Group
• The transaction between Wilnat, Inc. (doing business as KGM) and St. Louis-based private equity firm Compass Group Equity Partners
• The deal between Sieveking Inc. and Energy Petroleum Co.
• The acquisition of IEM Energy Consultants, LLC by White Wolf Capital
• The transaction between Neil Dornbusch & Associates and Anderson Process
• The sale of Metro-Tech Electrical Contractors, Inc. to Michael Bowman
• The deal between Storm Guardian Generators, LP, and Liberty Service Partners
• The transaction between Feakle Gas and Plumbing Limited and Water Intelligence PLC
• The acquisition of Micro-Precision Technologies, Inc. by Great River Capital Partners
• The transaction between Cardiff Gas Ltd and JGas Ltd
• The sale of Lenhart Electric Company to In Charge Electrical Services
• The transaction between Macro Works Limited and APEM Group Limited
• The deal between Adkins Electric, Inc. and Pacific Power & Systems, Inc.
• The sale of N&L Investment Corporation to Hufsey Mechanical
• The transaction between Absolute Solar and Wind Ltd and RSK Group
• The acquisition of Facit Testing Limited by Phenna Group

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