The utilities sector encompasses essential services that transport electricity, gas and water from the sites in which they are generated or sourced from, to homes and businesses.

The utilities sector has faced an increasingly negative reputation over the past few years, due to rising utility bills, windfall tax and scandals around sewage leaks and poor water quality. Understanding what the utilities sector is, the challenges it faces and the future goals for the industry, can help to make sense of where the sector is heading.

What is the utilities sector?

The utilities sector includes essential services that transport and supply gas, electricity and water, from power plants and energy sites to businesses and individual consumers. The utilities sector is formed by 3 key areas:

• Gas
• Electricity
• Water

In the 1980s, the utilities sector in the UK was privatised, meaning a variety of private companies now offer various utility services. Following privatisation in the UK, the “big 6” companies (British Gas, EDF, EON, Npower, Scottish Power and SSE) dominate the market, providing gas and electricity to various areas of the UK, however, they face competition from each other and smaller companies too.

On the other hand, the water industry faces little competition, with every provider covering a distinct area to each other. This set up causes unique challenges for the utilities sector as a whole and their consumers.

The utilities sector includes to building and maintenance of the infrastructure that transports electricity, gas and water from the sites they are sourced and generated. This means the sector is also responsible for the sewer and water supply and system throughout the UK.

What is the difference between the utilities sector and the energy sector?

The utilities sector and the energy sector work in tandem with each other and are sometimes put under the same umbrella. However, there are key differences.

In layman’s terms, the energy sector produces, refines and transports fossil fuels, or converts renewable energy sources such as hydro, geothermal, wind and solar to electricity. The utilities sector then transmits and distributes energy and water through national networks and infrastructures to the national grid and to consumer homes and businesses.

Trending skills in the utilities sector

Whilst the utilities sector is quite broad, there are some roles and opportunities which are high in-demand amongst employers. Here are a few of the key trending skills that are proving most popular currently:

• Construction
• Engineering
• Analytics
• Budgeting
• Stakeholder Management
• Health and Safety

Due to the Net Zero targets of 2030, there is an increasing amount of renewable energy sites being built. This has created a pressure within the utility sector to make sure these new sites are connected to the national grid as soon as possible, which is why we are seeing skills such as construction and engineering as the most in-demand skills currently.

Challenges for the utility sector

The utilities sector is facing challenges and pressures due to geopolitical and internal factors. Some of these factors are influencing the whole sector, and others have varying levels of effects depending on the particular area of utilities.

Ageing infrastructure

By and large, the whole sector is facing challenges from ageing infrastructure in the UK. For various reasons including debt, expensive and complex upgrades, and certain companies facing reduced competition, there has been limited investment into infrastructure in the past few decades.

Long planning delays

Coupled with the demand for improving infrastructure, is the challenge of securing planning permissions and funding to build new sites and networks. Changing governmental guidelines, and uncertainty with changing governments has caused challenges for the sector. Recently, the Labour government has unveiled plans to streamline the development of ‘critical infrastructure’ through the removal of barriers and expedition of certain projects that are vital to the energy and utilities sectors. This move is intended to speed up planning applications going forward.

Workforce challenges

Over 310,000 additional professionals are going to be required to work in the utilities sector by 2030, to cover the new jobs created by the Net Zero targets and replace the ageing workforce due to retire. A major challenge in attracting and recruiting professionals to the utility sector is the fact that many of the jobs are unglamourous, with long hours and extensive travel, all of which make it harder to attract professionals to the sector.

Supply and demand

Climate change, unpredictable weather and geopolitical crisis all cause major challenges for utilities companies as they try to manage supply and demand. The location of where the energy is sourced can create different problems for the utility sector, for example:

• Wars and tariffs can create supply chain issues when gas and oil are being mined from abroad
• Renewable energy sources rely on the weather. Certain types, such as solar, can be less reliable and predictable
• Cybersecurity threats increasing with greater use of technology within the supply chain and network

Managing continual and reliable access to energy sources is a challenge for both the energy and utilities sectors.

The future of the utilities sector

As the utilities sector gears up to help support the Net Zero targets of 2030 and beyond, there are a number of factors that are shaping its future.

Digitalisation

Digitalisation is one of the key objectives and goals of AMP8 (Asset Management Period), the 5 year regulatory cycle of the water industry’s regulatory body Ofwat. A particular focus of this objective is on the complete digitalisation of water companies to include data driven operations. As with all areas of utilities, digitalisation, AI and automation are major future trends to improve customer service, reduce costs and improve efficiencies.

Infrastructure investment

The much needed Great Grid Update will help to improve some of the current problems in the utilities sector. The update includes 17 major infrastructure projects. This will help to solve the issue of ageing infrastructure and connect new renewable energy sites to the national grid. Other infrastructure projects include a new reservoir,  being built by Southern Water to safeguard water supplies across the South East; it will be first new reservoir in the UK in over 30 years.

Sustainability

A recent report by Utility Week, a leading utilities publication, sets out key sustainability aims for the sector beyond 2030. This includes ensuring fleets, supply chains, and infrastructure programmes remain sustainable as the utilities sector approaches the pressures of meeting the Net Zero targets of 2030. Operating sustainably and finding ways to be more environmentally friends are key goals across utility companies in the sector.

Increasing usage

Statistics show that electricity is set to rise by 50% by 2035, and water usage is to increase by 30% by 2050. With additional infrastructure planned in the utilities sector, this rising energy and water usage will likely create more jobs and growth for the industry, as well as present a number of challenges.

Overall, the utilities sector is set to face immense growth, with growing pressures on the industry to embrace digitalisation, help support the country reach Net Zero targets and manage increasing demand on water, gas and electricity.

Consult Energy is a specialist utilities recruitment agency, who help support companies with the workforce talent challenges they face. For more information on how we can help you secure the talent you need, get in touch with our team here.