KBS - Utilties Infrastructure Services - Market Insight

MARKET INSIGHTS

According to the utilities industry analysis by the Global Market Model, the utilities industry is poised to experience a compound annual growth rate (CAGR) of 6.6% from 2022 to 2032. In 2022, the worldwide utilities market achieved a valuation of $6037.3 billion, contributing 6% to the overall global GDP . The UK offers expertise in sustainable infrastructure design, regulation and construction, combined with innovations that deliver a low carbon future. There are numerous domestic opportunities for potential investors in areas such as mining, construction, rail and water. These opportunities are being supported by new policies and funding. UK infrastructure is forecast to grow by 3.7% CAGR between 2020 to 2030 which is the fourth fastest in the world. (gov.uk) The UK government is launching innovative and important renewable energy schemes to meet Britain’s goal of zero carbon emissions by 2050. The move to

3.7% CAGR The UK infrastructure market is forecast to experience a from 2020 to 2030, the fourth fastest globally

developing domestic renewable and nuclear energy alternatives continues. As such, the UK will need to modernise its infrastructure and grid technology; and this offers growth opportunities for SMEs in this space.

Utility companies are looking to spend their money better, which has resulted in Tier 2 and 3 contractors that specialise in certain services being utilised to bring quality solutions to ongoing problems , as opposed to the blanket approach often found with large Tier 1 contractors. These smaller, independent companies are more cost effective and provide a better service, which has resulted in interest from large players within the market to make acquisitions to bring these resources in-house. There is a significant shift in the allocation of contracts within the utilities space taking place, with typical Tier 1 contractors losing market share to smaller independents. Tier 1 contractors have become increasingly expensive, adopting a point and shoot approach without providing effective solutions to ongoing problems. “THERE IS A CLEAR REQUIREMENT FOR THE UK’S INFRASTRUCTURE TO BE UPDATED IN ORDER TO ACHIEVE THE GOVERNMENT’S NET ZERO TARGETS” The size and scope of these Tier 1 utility contractors also hinders flexibility; they’re not nimble enough to change tact quickly when necessary. This is compounded by the shift in the type of works being completed, with efforts moving away from multi-hundred-million-pound new schemes and focusing on smaller scale projects that make existing water assets work better. The clear requirement for the UK’s infrastructure to be upgraded to achieve the governments target of Net Zero naturally results in smaller projects being undertaken throughout the country. There is also a dramatic increase in the level of investment into UK utilities infrastructure , with AMP 8 receiving record investment of £96bn, which is almost double the c£50bn invested into AMP 7. This increased investment has been highlighted as necessary in the most recent Environment Agency’s latest environmental performance report.