Utility Capital Expenditure (Industrial Report) - UK - July 2014

EXECUTIVE SUMMARY
The market
Water and sewerage industry
Figure 1: UK capital expenditure on sewerage services, 2008/09-2012/13
Electricity transmission and distribution industry
Figure 2: Forecast network investment of the electricity distribution network operators in Great Britain, 2015/16-2022/23
Figure 3: Capital expenditure by the electricity transmission industry in Great Britain, 2008/09-2012/13
Gas transmission and distribution industry
Figure 4: Total gas transmission and distribution capital expenditure, 2008/09-2012/13
Market factors
Utility industry regulation
Legislative factors
Companies
What we think
INTRODUCTION
Definitions
Water and sewerage
Electricity transmission
Electricity distribution
Gas distribution
Gas transmission
Methodology
Abbreviations
Market positioning
Customers
Suppliers
MARKET FACTORS
UK ECONOMY
GDP
Inflation
Interest rates
Business investment
WATER AND SEWERAGE INDUSTRY
Key points
Water and sewerage industry market factors
Industry regulation
Legislative environment
European Water Framework Directive (WFD)
Urban Waste Water Treatment Directive (UWWTD)
Figure 5: Sewerage treatment enhancement expenditure driven by UWWTD in England and Wales, 1990-2015
Figure 6: Sewerage treatment enhancement expenditure driven by UWWTD in England and Wales graph, 1990-2015
The Drinking Water Directive
Revised Bathing Water Directive
Figure 7: UK coastal bathing water compliance with Bathing Water Directive for mandatory coliform standards, 2009-13
Transfer of private sewers in England and Wales
Figure 8: Capital expenditure on private sewers in England and Wales, by water and sewerage company, 2009-13
The Flood and Water Management Act 2010
Water Bill 2013
WATER AND SEWERAGE CAPITAL EXPENDITURE
Key points
Capital expenditure
Figure 9: Total capital expenditure by water and sewerage companies in England and Wales, 2005-10 and 2010-15
Figure 10: Total capital expenditure by water-only companies in England and Wales, 2005-10 and 2010-15
Figure 11: Actual UK capital expenditure on water and sewerage services, 2008/09-2012/13
Figure 12: UK capital expenditure on water and sewerage services, 2008/09-2012/13
Figure 13: UK capital expenditure on water and sewerage services graph, 2008/09-2012/13
Process plant expenditure
Figure 14: UK capital and process plant expenditure by the water and sewerage industry, 2008/09-2012/13
Civil engineering expenditure
Figure 15: UK capital and civil engineering expenditure by the water and sewerage industry, 2008/09-2012/13
Figure 16: Civil engineering construction output for the sewerage industry in Great Britain, 2009-13
Figure 17: Sewers renovated and replaced in England and Wales, by company, 2008/09-2012/13
Building expenditure
Figure 18: UK capital and building expenditure by the water and sewerage industry, 2008/09-2012/13
Other expenditure
Figure 19: UK capital and other expenditure by the water and sewerage industry, 2008/09-2012/13
Figure 20: UK capital expenditure on water and sewerage services, by expenditure area, 2012/13
Water related capital expenditure in England and Wales
Figure 21: Analysis of water capital expenditure in England and Wales, by water and sewerage companies, by type, 2007/08-2010/11
Figure 22: Analysis of water capital expenditure in England and Wales, by water and sewerage companies, by type, 2011/12-2012/13
Figure 23: Analysis of water capital expenditure in England and Wales, by water-only companies, by type, 2007/09-2010/11
Figure 24: Analysis of water capital expenditure in England and Wales, by water-only companies, by type, 2011/12-2012/13
Figure 25: Analysis of water capital expenditure in England and Wales, by water only companies graph, by type, 2012/13
Scotland
Figure 26: Analysis of Scottish Water capital expenditure on water and sewerage services, 2006/07-2011/12
Figure 27: Progress of Scottish Water to Date in the Five Year Investment Programme, 2010/15
Northern Ireland
Figure 28: Analysis of Northern Ireland Water capital expenditure on water and sewerage services, 2008/09-2012/13
WATER AND SEWERAGE FUTURE CAPITAL EXPENDITURE
Key points
Figure 29: UK Population, by region, 2013-25
Capital expenditure during AMP5 2010-15
Figure 30: Total proposed capital expenditure by water and sewerage companies in England and Wales, 2010-2015
Figure 31: Forecast UK capital expenditure on the water and sewerage industry, 2010/11-2014/15
Figure 32: Capital expenditure on water and sewerage services in England and Wales during AMP5, 2010/11-2014/15
Figure 33: Forecast capital expenditure for Scottish Water, 2010/2011-2014/2015
Figure 34: Forecast Investment Programme for Northern Ireland Water, 2010/2011-2014/2015
England and Wales – AMP6 2015-20
Figure 35: Proposed total expenditure for AMP6 in England and Wales, by water and sewerage company, 2015/16-2019/20
Figure 36: Proposed total expenditure on water and sewerage services in England and Wales during AMP6, 2015/16-2019/20
Thames Tideway Tunnel
Scotland Investment Programme 2015-2021
Figure 37: Forecast Capital Expenditure for Scottish Water, 2015/16-2020/21
Northern Ireland Investment Programme 2015/16-2020/21
ELECTRICITY INDUSTRY
Key points
Electricity industry market factors
Price controls
Environmental and legislative factors
ELECTRICITY DISTRIBUTION CAPITAL EXPENDITURE
Key points
Capital expenditure
Figure 38: UK gross capital expenditure by electricity distribution network operators, 2008/092012/13
Figure 39: UK gross capital expenditure by the electricity distribution network operators, by company, 2008/09-2012/13
Figure 40: UK gross capital expenditure by the electricity distribution network operators graph, by company, 2008/09-2012/13
ELECTRICITY DISTRIBUTION FUTURE CAPITAL EXPENDITURE
Key points
Capital expenditure allowance 2010-15
New price control framework based on Revenue = Incentives+Innovation+ Outputs to come into effect from April 2015
Figure 41: Proposed total expenditure for RIIO-ED1 in Great Britain, by company, 2015/16-2022/23
Figure 42: Proposed total expenditure for RIIO-ED1 in Great Britain graph, by company, 2015/16-2022/23
Figure 43: Forecast network investment of the electricity distribution network operators in Great Britain, by company, 2015/16-2022/23
ELECTRICITY TRANSMISSION CAPITAL EXPENDITURE
Key points
Capital expenditure
Figure 44: Size of electricity transmission network in Great Britain, 2013
Figure 45: Allowed capital expenditure by the electricity transmission industry in Great Britain, 2007/08-2012/13
Figure 46: Capital expenditure by the electricity transmission industry in Great Britain, 2008/09-2012/13
Figure 47: Capital expenditure by the electricity transmission industry in Great Britain graph, 2008/09-2012/13
ELECTRICITY TRANSMISSION FUTURE CAPITAL EXPENDITURE
Key points
New price control period RIIO-T1 2013-21
Figure 48: Allowed “baseline” capital expenditure by the electricity transmission industry in Great Britain, 2013/14-2020/21
Figure 49: “Best view” forecast for load-related capital expenditure by the electricity transmission industry in Great Britain, 2013/14-2020/21
Figure 50: “Best view” forecast for load-related capital expenditure by the electricity transmission industry in Great Britain graph, 2013/14-2020/21
Figure 51: Baseline capital expenditure allowance for NGET, 2013/14-2020/21
Figure 52: Baseline capital expenditure allowance for SHETL 2013/14-2020/21
Figure 53: Baseline capital expenditure allowance for SPTL, 2013/14-2020/21
Drivers for future capital investment
Figure 54: Renewable electricity generation capacity awaiting/under construction, as of April 2014
National Grid’s electricity 10-year statement
Future potential energy mix
Figure 55: Forecast power generation installed capacity under “slow progression” scenario, by source, 2013-35
Figure 56: Forecast power generation installed capacity under “gone green” scenario, by source, 2012-35
Increased interconnectivity between European countries
Figure 57: Existing and planned interconnectors, as of November 2013
GAS INDUSTRY
Key points
Market factors
Social factors
Economic factors
Figure 58: Average wholesales gas prices, 2002-13
Figure 59: Average wholesale gas prices graph, 2002-13
Legislative and environmental factors
GAS CAPITAL EXPENDITURE
Key points
The market 2009-2013
Figure 60: Total gas transmission and distribution capital expenditure, 2008/09-2012/13
Figure 61: Total gas transmission capital expenditure, 2008/09-12/13
Figure 62: Total gas distribution capital expenditure, 2008/09-2012/13
Figure 63: Total gas distribution capital expenditure graph, 2008/09-2012/13
Replacement expenditure
Figure 64: Length of gas mains replaced, by distribution network operator, 2009-13
Figure 65: Length of gas mains replaced, by distribution network operator graph, 2009-13
GAS FUTURE CAPITAL EXPENDITURE
Key points
Forecast 2013-2021
Figure 66: Ofgem’s required expansion of the number of properties to alleviate fuel poverty, 2013-21
Transmission Network
Figure 67: Capital expenditure boundaries for National Grid Gas considered for Ofgem’s RIIO-T1, 2014-21
Figure 68: Capital expenditure plans by National Grid Gas under RIIO-T1, by category, 2014-21
Distribution Network
Figure 69: Controllable cost allowances for gas distribution companies under (RIIO-GD1), 2014-21
SUPPLY INDUSTRY STRUCTURE
Key points
Companies
AMEC
Figure 70: Financial analysis of AMEC, 2009-13
BALFOUR BEATTY
Figure 71: Financial analysis of Balfour Beatty, 2009-13
Figure 72: Turnover analysis of Balfour Beatty, by segment, 2012-13
KELLOGG BROWN & ROOT HOLDINGS
Figure 73: Financial analysis of Kellogg Brown & Root Holdings, 2008-12
THE COSTAIN GROUP
Figure 74: Financial analysis of Costain Group, 2009-13
Figure 75: Turnover analysis of Costain Group, by division, 2010-13
LAING O’ROURKE UTILITIES
Figure 76: Financial analysis of Laing O’Rourke, 2009-13
Figure 77: Financial analysis of Laing O’Rourke Utilities, 2009-13
MORRISON UTILITY SERVICES
Figure 78: Financial analysis of Morrison Utility Services, 2009-13
MCNICHOLAS CONSTRUCTION HOLDINGS
Figure 79: Financial analysis of McNicholas Construction (Holdings), 2009-13
FOREFRONT UTILITIES
Figure 80: Financial analysis of Forefront Utilities, 2009-13
FURTHER SOURCES AND CONTACTS
Trade associations and regulatory bodies
Trade magazines
Trade exhibitions