Price surge: Industry revenue growth will be powered by price increases
London, United Kingdom (PRWEB) August 08, 2013
The Electricity Trade industry is expected to generate revenue of £30.1 billion in 2013-14, compared with £26.2 billion five years earlier, representing compound annual growth of 2.8% in the five years period. According to IBISWorld industry analyst Lewis Sutton, “higher electricity prices have more than offset lower electricity consumption”. The volume of electricity consumed has been particularly low over the past five years in response to lower industrial production, poor economic conditions and higher prices. Business and household budgets have been tightened during the economic slowdown, cutting demand for power.
Higher wholesale electricity costs in 2013-14 are expected to lift electricity prices, and that increase, together with slightly higher sales volumes, is expected to lead revenue to grow 5.0% in the current year. The government has obliged firms to increase the proportion of energy obtained from renewable sources, but this comes at a cost that is ultimately passed on to electricity retailers. Industry generators have also been forced to pay higher mandatory taxes on carbon emissions, further inflating wholesale prices. Higher wholesale costs inflicted on electricity retailers have ultimately led to higher retail prices for consumers. Despite higher revenue, operators have had to endure tighter profit margins.
Stronger economic growth is expected to emerge during the next five years, underpinning higher demand for electricity. Sutton adds, “retail electricity prices are expected to rise due to higher fuel prices faced by generators, and increased penetration of more costly generation from renewables”. Overall, industry revenue is expected to grow strongly over the five years through 2018-19.
Market share concentration in the Electricity Trade industry is moderate with the four most dominant operators estimated to account for 67.1% of industry revenue. However, the industry is dominated by six operators rather than four and the top six accounts for 86.1% of industry revenue. Major companies include Centrica, E.ON UK, SSE, EDF Energy, RWE Npower and Scottish Power.
For more information on the Electricity Trade industry, including latest industry trends, statistics, analysis and market share information, purchase the full report from IBISWorld, the nation’s largest publisher of industry research.
IBISWorld industry Report Key Topics
Firms in this industry purchase electricity from generators and sell retail it to households and businesses.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalisation & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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