The industry has benefited by a large expansion of renewable energy generation in the US. Renewable energy, like solar and wind power.
(PRWEB) January 13, 2012
Revenue for the Electric Transmission Line and Tower Installation industry in the US expanded at an average annual rate of 1.6% to $12.3 billion in the five years to 2012. According to industry analyst Justin Molavi, IBISWorld expects a 3.9% increase expected in 2012. "Despite the recession, demand from renewable energy and aging infrastructure helped the industry grow. The growth of renewable energy heightened demand for transmission lines, as these generators are often located far from electricity demand centers. However, the recession did result in some demand issues as local and state governments faced low tax revenue and the industry’s customers found it harder to finance new transmission and upgrades."
Before the recession, local and state governments were better able to fix transmission issues through tax revenue and other types of bonds. After the recession, the industry faced a lack of new investment and less private sector participation as financing dried up. In response to these demand declines and highlighting the issue of the necessity of upgrading the nation’s electricity infrastructure, the Federal Energy Regulatory Commission (FERC) passed a rule to establish a framework for allocating transmission line costs to various parties and stakeholders for inter-state and intra-state lines in 2010, providing demand growth for the industry.
Molavi believes that "the next five years will set the stage for faster industry revenue growth. Renewable energy will continue to expand its footprint, resulting in more transmission lines and upgrades to existing infrastructure. While aging electricity infrastructure will likely remain a key issue, the rule passed by the FERC will continue to benefit the industry by providing incentives to stakeholders to invest in new transmission lines that cross state borders and make electricity delivery more effective."
The industry has benefited by a large expansion of renewable energy generation in the United States. Renewable energy, like solar and wind power, are often situated far from major metropolitan areas (where energy demand is high) and need transmission lines to transfer electricity to demand centers. Supported by favorable government incentives, renewable energy generation has grown at a quick pace. The incentives provide tax credits and require downstream utilities (located in states that passed laws requiring renewable energy generation) to diversify energy holdings and integrate renewable energy into the energy they sell.
Highlighting the heightened demand for transmission services, revenue from solar and wind power increased at an average annual rate of 17.6% and 19.9% in the five years to 2011. As more renewable energy projects were completed, more transmission lines needed to be built to transmit the electricity. This trend will continue to benefit the industry during 2012, as renewable energy continues to experience high demand, and revenue is expected to rise 3.9% from 2011 to 2012.
The Electric Transmission Line and Tower Installation industry is characterized by a low market share concentration. This trait can be attributed to the vast expansion of power plants, the most significant downstream market, across the United States. According to the US Energy Information Administration, about 5,800 operational power plants run on more than 18,000 individual generators in the United States. The sheer size of the customer base creates an opportunity for smaller, regional firms to cater to local markets, despite a presence from heavy industry players such as Quanta Services, Henkels & McCoy and Black & Veatch.
For more information visit IBISWorld’s Electric Transmission Line and Tower Installation industry.
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This industry constructs transmission lines and towers for electricity distribution, with firms specifically engaging in new work, additions and alterations.
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