A prognosticator forecasting the end of electric utilities as we know them isn’t news. Economists and market researchers have been telling this fortune for several years. But when the people in charge of utilities corroborate those reports, it’s no longer a tale read in the tea leaves. Electrical contractors (ECs) that are alert to the opportunities these changes portend could see their own fortunes improve significantly over the next 15 years.


Numbers tell the tale


The introductory statistic from the annual Global Power & Utilities Survey from consulting giant PwC (formerly Pricewaterhouse Coopers) is telling: In the next five years, 97 percent of responding electric-utility executives from 70 companies and 52 countries expect to see a medium-to-very-high level of disruption in their markets. By 2030, 73 percent of those respondents anticipate major or very major transformation to their business models. Among North American executives, 86 percent predict major market-model changes.


Phrases such as “market model” and “market disruption” can seem like 
consultant-speak—important to hedge fund managers and other Wall Street analyst types but without a whole lot of trickle-down impact. However, when 70 percent of executives in an industry that touches almost every refrigerator and light bulb across the globe start making such statements as, “Current market models won’t be sustainable, and the need for change is becoming urgent,” it might be time to consider the implications for the rest of us.


This disruption isn’t only an issue for countries such as Germany, with its well-documented difficulties incorporating large quantities of renewably generated electricity. Some 57 percent of North American respondents believe that current market models are already broken and the need for change is urgent. In this context, “market model” means the legal arrangements guaranteeing profits to utilities based on their infrastructure assets, which are often large, central generation stations. According to these executives, climate change and a range of technology advances—in distributed generation, energy-efficient equipment and both large- and small-scale energy storage—top the list of “megatrends” driving disruption. Following these are the influences of accelerating urbanization, demographic changes and shifts in global economic power.


An interesting difference between North America and the rest of the world is the influence of consumers, rather than regulators, in driving energy transformation—­how and where electricity is produced and delivered. Individual U.S. states have established renewable portfolio standards that outline a percentage of total electricity sales that must come from renewable sources, but those standards don’t include the burgeoning market in efficiency-related products, disruptive distributed rooftop solar panels, and, increasingly, home- and business-based battery systems.


EC opportunities


Several areas offer opportunities for ECs. First, there is the broad category of technological breakthroughs, because it overlaps with moves utility executives see as critical to their financial future. When asked what operational strategies will be most important by 2030, 62 percent of respondents selected smart city/home/community infrastructure, meaning a whole lot of smart thermostats and lighting controls will need to be installed in the next 15 years. Similarly, with 51 percent of executives seeing efforts connected to electric vehicles and transportation as an important strategy, ECs in the business of installing related charging equipment could see bottom-line growth.


Another important observation for ECs is that, by 2030, energy efficiency is anticipated to have an even bigger impact on the home markets of surveyed executives than either solar or wind generation. Seventy-one percent of respondents rate its impact as “high” or “very high,” compared to 60 percent for solar and 52 percent for onshore wind. This influence could help a broad range of ECs, from residential companies replacing over-the-sink fluorescent fixtures with LED lighting to industrial specialists upgrading a manufacturing plant to variable-­frequency drives. Utility-focused contractors could see growing business as well. PwC notes that global transmission and distribution losses in 2012 totaled 8.8 percent of the world’s total electricity generation. Reducing those losses could improve razor-thin utility margins, so related system improvements could become a budget priority for these companies.


Neither golden age nor death spiral


As to that much ballyhooed “death spiral,” the surveyed executives aren’t buying it—at least not most of them. When asked to rate the likelihood of any of three possible futures—“death spiral,” “slow decline,” or a “golden age” of utility reinvention—only 29 percent of North American respondents opted for the most pessimistic option. However, this doesn’t mean they described their industry’s future as rosy. In fact, 93 percent of them saw flat-to-declining growth in their future.


But the rise in distributed generation versus central plants could mean more opportunities for ECs to participate in the broader market. Indeed, this shift could lead to a new group of applicants for future help-wanted ads: electric utility executives seeking to restart their careers in an area where growth seems more assured.