As our power transmission and distribution infrastructure continues to age, increases in natural gas and renewable generation are driving a new round of investment. Transmission and distribution networks are essential for linking energy generation and consumption and these networks are becoming more complex and secure, with a focus on smart infrastructure that can transmit real time data. While these digital enabled networks offer significant benefits, security concerns have led to a focus on hardening and resilience. Recent years have seen a major shift in domestic generation, with natural gas and renewables accounting for a growing portion of generation typically at the expense of coal.
Issues with intermittency have led to a rapid increase in investment in smart grids using smarter and more robust equipment. There has been an increasing realization in recent years that as the grid converts to a higher portion of renewables, significant investments will be needed. Investment in monitoring, control, and operation of the grid will have other benefits as well, increasing the resiliency of our power supply and reducing demand through improved demand management. As renewable generations account for a growing portion of power production, technologies like HVDC will increasingly be required to transport power between generation and consumers. At the same time, the regulatory environment is not adapting nearly as quickly, though signs of more nimble regulations better aligned with today’s environment are beginning to emerge. The transmission and distribution industry has seen an active M&A market in recent years, led by large industrial buyers looking to leverage sellers’ technology as well as capturing more spending driven by the need to repair, replace and upgrade the country’s transmission and distribution infrastructure.
Companies operating in the transmission and distribution sector have to align their strategy to take advantage of both ongoing maintenance of the existing grid and the growth in more robust smart gird technologies and transmission serving renewables. To maintain growth and profitability companies need to focus on both operational excellence and innovation.