Sempra Generation Competition
Now Viewing Sempra Generation's competition in: Electric Power Generation
Recent Developments
Power Firms' Production Growth Low - Power companies are producing more electricity, but at relatively low growth rates. US electric power generation increased 1.2 percent in April 2008 from year-earlier levels. Average annual production grew 2.2 percent in 2007 and 6.6 percent over five years. Many facilities face capacity issues.
Demand, Costs Help Drive Up Prices - The electric power generation industry is raising prices in response to rising demand and costs. US producer prices for electric power generation increased 11.8 percent in April 2008 from year-earlier levels. Average annual producer prices rose 3.1 percent in 2007, but grew 25.5 percent in only three years.
Construction Spending on Power Facilities Grows Rapidly - Construction spending on power facilities, including for electric energy, is growing rapidly. US construction spending for power facilities increased during first quarter 2008 compared to year-earlier levels: 32.9 percent for public sector and 26.8 percent for private sector. Rises in demand and costs contribute to spending increases.
Competitive Landscape
Demand is driven by commercial, government, and residential needs for electrical power, which depend on population growth, economic activity, and electricity prices. Profitability is determined by government regulations and fuel costs. Large companies have an advantage in negotiating fuel contracts and being able to pass the costs of implementing government regulations directly to consumers. Small companies can compete effectively by exploiting market niches, such as offering “green power” in regulated markets. The industry is capital-intensive: average annual revenue per employee is $642,000.
Electric Power Generation Industry Forecast
from Hoover's/D&B subsidiary First Research
The output of US electric utilities, which includes generation, is forecast to grow at an annual compounded rate of 4.7 percent between 2007 and 2012.
Electric Utility Growth Stabilizes
First Research forecasts are based on INFORUM forecasts that are licensed from the Interindustry Economic Research Fund, Inc. (IERF) in College Park, MD. INFORUM's "interindustry-macro" approach to modeling the economy captures the links between industries and the aggregate economy.
First Research Opportunity Rating
The First Research Opportunity Rating is First Research's estimate of industry performance vs. industry risk over the next 12 to 24 months.
- Demand: Depends on business/industrial activity
- High fixed costs, high energy costs
- Risk: Slowing economy cuts use
Industries Where Sempra Generation Competes
- Energy & Utilities
- Independent/Merchant Power Production (primary)
- Energy Trading & Marketing
- Wholesale Energy Trading & Marketing
- Oil & Gas Exploration & Production
