Global Power Supplier Industry Outlook Survey 2011–2012

Overall, the global power industry is optimistic about revenue growth and marketing budgets of power industry suppliers are expected to rise by over 7% over the next 12 months.


London – October 14, 2011 – The power industry is confident of revenue growth as economies recover from the global financial crisis and weak growth. Increased investment in clean energy is a key driver, partially as a result of government economic stimulus plans focusing on environmentally friendly enterprises and partially as a result of sharp rises in international oil prices. In addition, strong growth in emerging markets such as India and China has contributed to the increase in optimism.


This growth is expected to be strongest in emerging markets. The expansion of business activities in emerging markets, along with changing consumer lifestyles and a rise in disposable income, will stimulate the demand for electronic goods, and power.


However, market uncertainty remains high. Limited fossil fuel resources, high exploration costs, the high cost of building renewable energy plants, stringent market regulations, including emission norms, and rising competition in the market all have contributed to this uncertainty.


In addition to revenue growth, marketing budgets are expected to increase. Almost 30% of respondents expect their marketing budget to rise between 5% and 10% due to greater government funding for renewable energy projects and capacity increases. Larger marketing budgets will result in increased investment in direct mail campaigns, online media and events.


Optimistic expectations for revenue growth
Almost two-thirds of respondents across the power industry are more optimistic about revenue growth for their company over the next 12 months. Reasons behind this trend include significant investment in clean energy due to a sharp rise in international oil prices, population growth and concern over carbon emissions. In addition, strong growth in emerging markets such as India and China has contributed to the increase in optimism. Investments in the power sector are also expected to grow in other regions such as Central and Eastern Europe.


Increased merger and acquisition activity expected
Executives from power industry buyer companies expect increased levels of consolidation in their industry over the next 12 months. High growth in emerging markets and overcapacity in developed regions, and the need to develop new efficient technology solutions as a long-term priority for companies, is expected to drive M&A activity. For 2011, the key factors behind the expected increase in the level of consolidation in the industry have changed to include the need to expand geographical presence, the optimum utilization of production capacity and to add new capabilities.


Emerging markets the highest growth regions
The top five growth regions in the power industry are identified as India, China, the Middle East, Brazil and Eastern Europe. The expansion of business activities in emerging markets, along with changing consumer lifestyles and a rise in disposable income, will stimulate the demand for electronic goods. The industrial demand for power is also increasing on a daily basis, adding to a high existing demand for power globally. India is expected to add 82 gigawatts of capacity to its power sector over the next 5 years, with total investment reaching US$200 billion, including the US$120 billion earmarked for power generation alone. Moreover, high growth in infrastructural projects, the growth of the industrial sector, the rising population and investment in renewable projects have led to a rise in investment opportunities in China. Meanwhile, the Middle East has emerged as another high growth power market driven by the high demand for power for power-intensive infrastructure and construction projects in the region.


Market uncertainty a major concern
Market uncertainty, responding to pricing pressure, and the retention and recruitment of staff are the most immediate business concerns for the global power industry. Market uncertainty has remained a leading concern since 2009. Limited fossil fuel resources, high exploration costs, the high cost of building renewable energy plants, stringent market regulations, including emission norms, and rising competition in the market all have contributed to uncertainty.


Rising marketing budgets
ICD Research’s industry survey revealed that, on average, the marketing budgets of power industry suppliers are expected to rise by over 7% over the next 12 months. Moreover, 27% of respondents expect their marketing budget to rise between 5% and 10% due to greater government funding for renewable energy projects and capacity increases, which are expected to increase the marketing budgets of suppliers through investment in direct mail campaigns, online media and events. The average size of the global, annual marketing budget of power industry supplier respondents in 2009 was US$3 million, which has declined to US$2.8 million in 2011.


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For more information on the article, please contact:


Shelly Wills
Tel: +44 (0) 20 7936 6671
shelly.wills@industryreview.com