Empowering utilities

The New Rules For Keeping The Lights On

Driven by the rise of new energy technologies, climate change and fluctuating energy demands, utility markets in developed economies are undergoing rapid and radical changes in direction.

Oliver Wyman conducted a recent study on global utility markets and discerned three primary patterns in terms of structural market shifts. Diverse countries are characterized by either:

  1. Decentralized generation under government-set targets
  2. Monopoly regulation at the local level or
  3. Balancing market competition with strong regulatory oversight.

The energy markets of Germany, the United States and the United Kingdom each represent one of these patterns.

Read more on our view of global utility markets by downloading the Oliver Ideas App.

Electric Utility Value Creation and DestructionStructural market shifts are having a big impact on electric companies' earnings and value

Decentralized Generation

Germany, 2008-2014

  • Declining profits in the generation business
  • Drop in wholesale prices due to increased renewables, which make up more than three-quarters of the total generation profit pool and are mostly in the hands of new market players


United States, 2008-2014

  • Differentiated picture depending on degree of regulation and reflecting business strategy
  • Pipes & wires and vertically integrated utilities have achieved the best gains in earnings (+25%) and enterprise value (+73%)
  • Hybrid utilities with both regulated and non-regulated business show the worst performance (earnings -6% and enterprise value +12%)

Balanced Market

United Kingdom, 2009-2014

  • Large differences along the value chain
  • Decline in conventional generation erased nearly 50% of the original profit pool
  • Renewables as well as domestic gas and power supply have had positive effects on value

Empowering utilities