A new report by AMA Research has said utilities construction output will grow to 2014 due to long term capital investment in water, and the growth of nuclear and renewable energy.
Prospects for utilities construction remain relatively optimistic with construction output expected to experience moderate-good annual gains to 2014 when the market is expected to reach £4.4bn, said the report.
Key to this progressive growth is likely to be the long term capital investment programmes of key sectors and also growth in the electricity sector boosted by new nuclear build programmes and expected increases in renewable energy production capacities.
Construction output for the utilities market in 2009 for Great Britain was £3.65bn − however, this represents 4% decline on the previous year.
The good growth in 2008 was followed by a market adjustment in 2009 but still resulted in output levels for 2009 being 7% ahead of 2007.
In the water sector, the continued focus of regulator Ofwat on improved customer service and water quality initiatives in recent years has resulted in greater capital spending programmes on improvements to mains and also water and sewage treatment plants.
The longer-term investment plans that characterise the water sector have been fundamental to a smoothing of the output curve in recent years and lessening the impact of more volatile sectors such as electricity.
In 2009, the water sector accounted for 51% of utilities construction output in Great Britain, with output having been underpinned by the end of the AMP4 programme.
In energy, the scale of large power station projects and larger renewables commissioning has meant that construction output for the electricity sector has been more volatile than for water in recent years with electrical construction output peaking at £1bn in 2007-08 before declining to £896M in 2009.
Differences remain in the level of competition within the utilities sectors, with telecoms now regarded as fully open but with others such as water and electricity still subject to pricing controls from the regulatory authorities.
A key feature of the utilities market is the longer term, larger scale projects that are let over a number of years which tend to have a smoothing effect on construction output for the utilities market. The water sector in particular is characterised by five year Asset Management Programmes (AMP) with levels of capital investment for these programmes determined by the water regulator Ofwat.