Electricity Supply and Distribution (Industrial Report) - UK - June 2014


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Mintel

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The country’s ageing infrastructure assets continue to drive capital investment in the electricity distribution industry. Distribution network operators are also ramping up investment in new technologies to accommodate higher quantities of distributed generation and low carbon technologies on the grid.”
Table of Content

Executive Summary

The market
Gross capital spending driven by asset replacement and refurbishment activity
Figure 1: UK gross capital expenditure by the electricity distribution network operators, 2008/09-2012/13
Major variations in gross capital spending by geographical area
Figure 2: UK gross capital expenditure by the electricity distribution network operators, by company, 2008/09-2012/13
Non-load related capital spending to dominate network investment between 2015 and 2023, reflecting asset replacement requirements
Innovation to focus on smart grid technologies to facilitate the transition to a low-carbon economy
Low Carbon Network Fund provides support to DNOs to trial new technologies
Figure 3: Forecast network investment of the electricity distribution network operators in Great Britain, 2015/16-2022/23
Electricity supply market dominated by the ‘big six’ energy suppliers, with a combined market share of more than 90%
Average dual fuel bills more than doubled over the last 10 years
Figure 4: Breakdown of average domestic electricity household bill, as of January 2013
Roll-out of smart meters at centre of key changes to energy supply markets over the next few years
Market factors
DNOs subject to price controls set by industry regulator Ofgem
Decarbonisation of UK economy to increase loads placed on distribution network
Renewables Obligation leading to rise in Distributed Generation
Renewable Heat Incentive (RHI) promotes take-up of heat pumps
Energy Company Obligation (ECO) scheme and Green Deal
Ofgem market review – Reforming the electricity retail market
Companies
Electricity distribution Industry
Introduction of competition in network connections
Electricity supply Industry
Proposed CMA investigation could lead to break-up of ‘big six’ energy suppliers
What we think

Introduction

Definitions
Methodology
Abbreviations
Market positioning
Great Britain
Northern Ireland

Economy

Inflation
Interest rates
Business investment

Market Factors

Price controls
Environmental and legislative factors
Climate Change Programme (including Climate Change Levy and Agreement)
Carbon Plan
Green Deal & Energy Company Obligation (ECO)
Ofgem Retail Market Review
Electricity Market Reform
Renewables obligation
The Renewable Heat Incentive
Combined Heat and Power

Distribution Industry Structure

Key points
Industry overview
Figure 5: Ownership of the distribution network operators in the UK, as of May 2014
Regional electricity demand
Figure 6: Electricity consumed in Great Britain, by region, 2012
Figure 7: Regional proportional importance of electricity consumed in Great Britain, 2012
Electricity consumption by end-use sector
Figure 8: Analysis of electricity usage, by type of industry, UK, 2005-12
Figure 9: Analysis of electricity usage, by the commercial sector, 2008-12
Figure 10: Analysis of electricity usage graph, by the commercial sector, 2008-12
Scotland
Northern Ireland

Electricity Distribution Sector Overview

Key points
Overview
Figure 11: Distribution network operators in Great Britain, by region, 2014
Size of UK distribution networks
Figure 12: UK distribution networks, 2012/13

Electricity Distribution Market Trends

Key points
Introduction of Competition in Network Connections
Trends in UK Electricity Supply
Figure 13: Analysis of electricity supply in the UK, 2009-13
Figure 14: Analysis of electricity supplied in the UK, by type of fuel used in generation, 2009-13
Figure 15: Analysis of electricity supplied in the UK, by type of fuel used in generation, 2013
Smart Grid Development to Support Low Carbon Economy
Figure 16: Renewable electricity generation in the UK, 2009-13
Figure 17: Renewable electricity generation in the UK graph, 2009-13
Distribution Price Control Review
The Low Carbon Network Fund (LCN)
Electricity North West
Northern Powergrid
SP Energy Networks
SSE
UK Power Networks
Western Power Distribution

Electricity Supply Sector Overview

Key points
Market background
Figure 18: Proportion of domestic electricity customers by supplier type, by region, 2000 and 2012

Electricity Supply Market Issues

Key points
Rise in Energy Bills and Dominance of the ‘Big Six’ Suppliers
Figure 19: Breakdown of average domestic electricity household bill, as of January 2013
Figure 20: Breakdown of average domestic electricity household bill graph, as of January 2013
Increased Competition from Smaller Suppliers
Smart Meter Roll-out

Capital Expenditure

Key points
Capital expenditure
Figure 21: UK gross capital expenditure by the electricity distribution network operators, 2008/09-2012/13
Figure 22: UK gross capital expenditure by the electricity distribution network operators graph, 2008/09-2012/13
Figure 23: UK gross capital expenditure by the electricity distribution network operators, by company, 2008/09-2012/13
Forecast capital expenditure
Capital spending during price control period 2010-15 focussed on asset replacement
New price control framework based on Revenue = Incentives+Innovation+ Outputs to come into effect from April 2015
Maintain reputational incentive for business carbon footprint (BCF)
Figure 24: Proposed total expenditure for RIIO-ED1 in Great Britain, by company, 2015/16-2022/23
Figure 25: Proposed total expenditure for RIIO-ED1 in Great Britain graph, by company, 2015/16-2022/23
Figure 26: Forecast network investment of the electricity distribution network operators in Great Britain, by company, 2015/16-2022/23
DNOs
Western Power Distribution
Figure 27: Core activity costs by Western Power Distribution, by type, 2011-15 and 2016-23
Figure 28: Asset replacement expenditure by Western Power Distribution, by type and company, 2016-23
Figure 29: Capital expenditure planned by Western Power Distribution for the West Midlands, by type, 2016-21
Figure 30: Capital expenditure planned by Western Power Distribution for the East Midlands, by type, 2016-21
Figure 31: Capital expenditure planned by Western Power Distribution for South Wales, by type, 2016-21
Figure 32: Capital expenditure planned by Western Power Distribution for the South West, by type, 2016-21
UK Power Networks
Figure 33: Activity costs by UK Power Networks, 2011-15 and 2016-23
Figure 34: Activity costs by UK Power Networks graph, 2011-15 and 2016-23
Figure 35: Asset investment by UK Power Networks, by type, 2011-15 and 2016-23
Figure 36: Capital expenditure planned by London Power Networks, by type, 2016-21
Figure 37: Capital expenditure planned by Eastern Power Networks, by type, 2016-21
Figure 38: Capital expenditure planned by South Eastern Power Networks, by type, 2016-21
Northern Powergrid
Figure 39: Activity costs by Northern Powergrid, by type, 2011-15 and 2016-23
Figure 40: Comparison of average annual activity costs by Northern Powergrid, 2011-15 and 2016-23
Figure 41: Network investment by Northern Powergrid, by type, 2011-15 and 2016-23
Figure 42: Capital expenditure by Northern Powergrid (Northeast), by type, 2011-15
Figure 43: Capital expenditure planned by Northern Powergrid (Northeast), by type, 2016-21
Figure 44: Capital expenditure by Northern Powergrid (Yorkshire), by type, 2011-15
Figure 45: Capital expenditure planned by Northern Powergrid (Yorkshire), by type, 2016-21
SP Energy Networks
Figure 46: Activity costs by SP Energy Networks, 2011-15 and 2016-23
Figure 47: Comparison of average annual activity costs by SP Energy Networks, 2011-15 and 2016-23
Figure 48: Asset replacement expenditure by SP Energy Networks, by asset type, 2016-23
Figure 49: Capital expenditure planned by SP Distribution, by type, 2011-15 and 2016-23
Figure 50: Capital expenditure planned by SP Manweb, by type, 2011-15 and 2016-23
Electricity North West
Figure 51: Activity costs by Electricity North West, by type, 2011-15 and 2016-23
Figure 52: Comparison of average annual activity costs by Electricity North West, 2011-15 and 2016-23
Figure 53: Asset investment by Electricity North West, by type, 2011-15 and 2016-23
Figure 54: Planned expenditure by Electricity North West, by type, 2014-21
Scottish and Southern Energy Power Distribution
Figure 55: Core activity costs by Scottish and Southern Energy Power Distribution, by type, 2011-15 and 2016-23
Figure 56: Comparison of average annual activity costs by Southern Energy Power Distribution, 2011-15 and 2016-23
Figure 57: Asset Investment by Scottish and Southern Energy Power distribution, by type, 2011-15 and 2016-23
Figure 58: Capital expenditure planned by Scottish Hydro Energy Power Distribution, by type, 2016-23
Figure 59: Capital expenditure planned by Southern Energy Power Distribution, by type, 2016-23
Northern Ireland Electricity
Figure 60: Capital expenditure by NIE Transmission and Distribution, 2008/09-2012/13
Figure 61: Capital expenditure determination for NIE Transmission and Distribution, 2012/13-2016/17

Company Profiles Introduction

Key points

Western Power Distribution

Western Power Distribution (East Midlands)
Figure 62: Financial analysis of Western Power Distribution (East Midlands), 2008-13
Western Power Distribution (West Midlands)
Figure 63: Financial analysis of Western Power Distribution (West Midlands), 2008-13
Western Power Distribution (South West)
Figure 64: Financial analysis of Western Power Distribution (South West), 2009-13
Western Power Distribution (South Wales)
Figure 65: Financial analysis of Western Power Distribution (South Wales), 2008-12

UK Power Networks

UK Power Networks: Eastern Power Networks
Figure 66: Financial analysis of Eastern Power Networks, 2008-12
UK Power Networks: London Power Networks
Figure 67: Financial analysis of London Power Networks, 2008-12
UK Power Networks: South Eastern Power Networks
Figure 68: Financial analysis of South Eastern Power Networks, 2008-12

Northern Powergrid

Northern Powergrid (Northeast)
Figure 69: Financial analysis of Northern Powergrid (Northeast), 2009-13
Northern Powergrid (Yorkshire)
Figure 70: Financial analysis of Northern Powergrid (Yorkshire), 2009-13

SP Distribution

SP Manweb
Figure 71: Financial analysis of SP Manweb, 2008-12
SP Distribution (South & Central Scotland)
Figure 72: Financial analysis of SP Distribution, 2008-12

SSE

Figure 73: Financial analysis of SSE, 2009-13
Figure 74: Turnover analysis of SSE, by business segment, 2012-13
Southern Electric Power Distribution
Figure 75: Financial analysis of Southern Electric Power Distribution, 2009-13
Scottish Hydro Electric Power Distribution
Figure 76: Financial analysis of Scottish Hydro Electric Power Distribution, 2008-13

Electricity North West

Figure 77: Financial analysis of Electricity North West, 2009-13

Northern Ireland Electricity

Figure 78: Financial analysis of Northern Ireland Electricity, 2010-13

British Gas Trading

Figure 79: Financial analysis of British Gas Trading, 2008-12

EDF Energy

Figure 80: Financial analysis of EDF Energy, 2008-12

NPower

Figure 81: Financial analysis of Npower, 2008-12

E.ON Energy

Figure 82: Financial analysis of E.ON Energy Solutions, 2008-12
Figure 83: Turnover breakdown for E.ON, 2012

Scottishpower Energy Retail

Figure 84: Financial analysis of ScottishPower Energy Retail, 2008-12

First Utility

Figure 85: Financial analysis of First Utility, 2008-12

Further Sources and Contacts

Trade associations and regulatory bodies
Trade magazines
Trade exhibitions