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Analysis of the North American Transmission and Distribution (T&D) Services Market 

  • May 2014
  • -
  • Frost & Sullivan
  • -
  • 131 pages

Summary

Table of Contents

Increased Investment to Bring Opportunities

Key Findings

• The North American transmission and distribution (T&D) services market was valued at $ x billion in 2012.
• The market suffered due to lack of investment in T&D infrastructure. However, the sector is currently benefitting from an expansion in the power sector.
• Revenues are up from $ x billion in 2009 and are expected to rise to $ x billion in 2014. Slower growth is projected in the market in the long run, reflecting a compound
annual growth rate (CAGR) for the period 2012 to 2018 of x %.
• The United States comprises, by far, the largest market for T&D services in North America. As of 2012, the region accounted for x % of revenues.
• The dominance of the United States reflects its larger geographic size, population, and current investment in renovating and reconfiguring the transmission market.
• Forecasts for 2018 show Canada with a slightly larger share of revenues, at x %, with a slowdown in US projects, which are set to peak in 2013–2014.
• In terms of T&D services offered, the market is divided into those services directed towards distribution ( x - x kV) and transmission ( x kV+) voltages. Distribution voltages are commonly termed medium voltage (MV), while transmission as High Voltage/Extra High Voltage (HV/EHV).
• Three types of T&D service are offered to the market. These include engineering and consultancy, construction and operations and maintenance (O&M). Many of the larger vendors offer more than 1 of these services to the market with the largest offering a more complete engineering, procurement, construction (EPC) service to clients.
• Currently, the biggest market by value are for contracting services. Here revenues associated with distribution projects are larger, having accounted for x % of total
revenues in 2012. Construction revenues for transmission projects account for a further x % of the total T&D service spend in 2012.
• Construction services are growing quickly, especially for transmission projects. However, between 2012 and 2018, a softening in transmission project expenditure will lead to decrease in spending of x %. Spending on distribution services will increase to x %.
• Of the other types of services offered to the T&D market, O&M is the major component, reflecting the technical skills required to manage and service modern T&D equipment, such as substations. O&M revenues from transmission amounted to x % of revenues in 2012, while those from distribution voltage contributed a further x %.
• Both types of O&M support have registered growth since 2009, and support for distribution projects is currently growing quicker. This area has traditionally had the greatest degree of self performance by utilities.
• Both contracting and O&M services will benefit from greater external support. This is especially the case for distribution projects; meanwhile, a considerable amount of work will continue to be performed in-house, especially the case for contracting.
• Engineering and consultancy services represent the smallest sector within the market. Services provided for the transmission sector accounted for x % of total revenues in 2012, while those for the distribution sector accounted for x % of revenues.
• The North American T&D services market is dominated by a large number of vendors. The largest of these companies offer a full scope of services including EPC. Many of
these large companies grew over the last decade through strategic acquisitions. Key names include Quanta Services, MYR Group, EMCOR Group, Pike Electric, and Henkels & McCoy.
• Other participants typically focus on particular sectors of the market and can be nationally or locally based. Those with a construction background are more likely to have a regional and local presence, with some acting as sub-contractors to larger contractors. Specialist suppliers such as ABB and Siemens, in contrast, operate nationally and direct their attention to the O&M market.
• New entrants, such as independent service companies, are increasingly targeting the O&M market on the grounds of increased utility investment and increased outsourcing. This, in turn, boosts the number of service companies and equipment manufacturers looking to offer maintenance and service agreements.

CEO’s Perspective

T&D services are dominated by expenditures regarding contracting and demand for O&M support.
Network renewal, new generating capacity, and reconfigurations are key drivers towards investments.
The strong demand for T&D services is set to peak in 2014, with slower growth thereafter.
IOUs comprise the main market for T&D services, although outsourcing is growing with POUs.
Interest in EPC is expanding, as are demands for full-service O&M support.

Key Exclusions

• This study only focuses on T&D service provision.
• Frost & Sullivan adopted the terminology used by many in the sector when defining transmission and distribution voltages namely that transmission projects broadly equate to high voltages (HV/EHV) while distribution projects are MV.
• Transmission lines can range as high as x kV and as low as x kV while distribution line voltages are typically in the range of x kV, x kV and x kV. For the purpose of this study, the definition between the 2 is 1 – x kV (distribution) and x kV+ (transmission).
• Low voltage, namely < x kV, are excluded from this analysis.
• Internal expenditure by utilities and others in servicing transmission and distribution assets. Such self performance, while showing considerable variance, is stronger for services targeted at distribution voltages.
• Services directly outside of T&D, such as those related to power generation, are also excluded from the analysis.

Key Questions This Study Will Answer

Is the North American T&D services market growing, how long will it continue to grow, and at what rate?
Are the existing competitors structured correctly to meet customer needs?
What segments of the T&D services market will represent the greatest growth potential over the next several years?
How will the structure of the market change with time?
What vertical markets will represent the greatest growth potential over the next few years?
Are the services offered today meeting customer needs or is additional development needed?

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