HfS Industry Health Dashboard: Utility Industry

The economic environment has been tough for utilities. Flat demand has led to slow revenue growth or even declines in revenues. Utilities across the globe are looking at mergers and acquisitions and split-offs as answers to the challenging environment. What is the impact on the industry’s health?

It is hard to find an industry with more challenges than the utility industry. The list of challenges the utility industry has to deal with now and in the near future is almost endless. Economic, societal, market, political, and regulatory pressures are coming together, bringing immense challenges for companies to solve through more effective and lower cost operations. The utilities industry has encountered different disruptive forces over the last few decades and now faces a new wave of impactful forces.

Technological progress, changing demand, increasing costs, and changing expectations in conjunction with the trends for distributed renewable generation, a different role for nuclear following the Fukushima disaster, and the climate change goals from the Paris COP21 Agreement are driving the next wave of disruption.

In order to take measure of the state of the utility industry, HFS has developed its health rating approach—a methodology that draws on multiple measures of growth and industry fortitude to assess an industry’s overall well-being. Measures include:

• Three years of revenue and profit data for the top 50 publicly traded utilities worldwide.
• M&A growth for utilities over the last three years to gauge climate and focus.
• IPO growth over the past three years to understand expansion potential for the sector.

The HfS Utility Operations 2018 Blueprint examines the state of the utility industry and investigates the service provider landscape in terms of how they are supporting and enabling the digital transformation of utilities. We analyzed the capabilities of 18 service providers across the utility operations value chain to develop a comprehensive analysis of industry-specific services and solutions for the utility industry.