IBISWorld Market Research
Privatisation and renewable energy are both set to alter the industry landscape.
Melbourne, Australia (PRWEB) October 25, 2013
Electricity distribution networks transport electricity from high-volume transmission networks to households and businesses. In the five years through 2013-14, distributors of electricity have expanded the scope of their networks. The positive relationship between the size of the industry's fixed capital formation and the industry's regulated pricing structures has created revenue growth. Revenue has increased at a compound annual rate of 7.7% over the five years through 2013-14 to $27.5 billion, with growth of 5.0% forecast for 2013-14. Over this period, network investment increased to meet rises in potential peak electricity demand. Industry networks are built and regulated to ensure a safe supply of electricity, even at electricity demand peaks on the hottest of summer days. IBISWorld industry analyst Caroline Finch states, “To match reliability standards set by regulatory bodies, electricity distributors have invested in extra capacity. More-resilient networks mean more capital expenditure, depreciation and maintenance costs.” These costs are being passed on by the Electricity Distribution industry to end users through mounting charges for network access, as approved by regulators.
In the next five years, numerous changes are likely to affect the industry. Many of the characteristics of the current legislation regarding the industry are under review. New guidelines and rules have been adopted for future investment in the industry. In addition, barriers to the privatisation of industry operations appear to be weakening. Privatisation has not been a feature of the industry for over a decade and would bring about a range of structural changes to its operations. The technology used for generating electricity is also changing, with renewables such as wind showing the fastest growth in terms of new installation. According to Finch, “The growth of renewables, particularly the installation of small-scale solar power generation by households, is likely to challenge the structure of current electricity transport networks.”
The Electricity Distribution industry technically has a medium level of market share competition, as measured by the contribution to industry revenue of the four largest players. State and territory governments still play a large role in electricity distribution. This limits the market share any one company can hold. On the other hand, market fragmentation is capped, with just 15 networks involved in the industry. This limits the total number of entrants. The low level of privatisation has limited changes in trends in market share concentration over the five years through 2013-14. Further, government ownership limits the volatility of market share concentration caused by mergers and acquisition activity. Moves to privatisation would likely lead to a change in the market share concentration of the industry, should they occur in the five years through 2018-19. The industry’s major players are Ausgrid, ENERGEX, SA Power Networks and Victoria Power Networks. For more information, visit IBISWorld’s Electricity Distribution report in Australia industry page.
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IBISWorld industry Report Key Topics
Companies in this industry operate low voltage electricity distribution systems, including lines, poles, meters and wiring, that deliver electricity to final consumers.
Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
International Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Industry Globalisation
Major Companies
Operating Conditions
Capital Intensity
Technology & Systems
Revenue Volatility
Regulation & Policy
Industry Assistance
Key Statistics
Industry Data
Annual Change
Key Ratios
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