Industry’s Focus Evolves
Tom Flaherty is a partner with Strategy& – a part of the PwC network – who has focused on utility growth strategy, mergers and acquisitions (M&A), and business transformation for over forty years. He has been involved with approximately eighty percent of utility M&A stock transactions greater than a billion dollars in the U.S., and supported clients in Great Britain, Italy, Spain, France, Argentina, Venezuela, Australia, and Canada in consolidation or carve-out assignments. He has also provided expert testimony in more than thirty jurisdictions on utility combinations and benefits.
For much of their history, utilities have been considered to be patient subscribers to industry sponsored research and development. Focused research and development was reserved for the largest companies with the greatest need for applied outcomes.
If investment was made in research and development, it generally focused on a few key topics around two principal areas of generation. These were, for example, nuclear technology advancement and coal emissions control.
Both of these areas were viewed by utility sponsors as creating advantage for future central station design. They were worth the expenditure level for the anticipated value of the outcome.
Over time, financial challenges emerged. Interest waned and spend levels atrophied. Utilities became dependent on external trade groups, universities and the federal government for both new ideas and basic and applied research.
As a result, the pace of technological change was slow. The adoption rate for new technologies was even slower.
Today we see a renewed interest in identification, evaluation and testing of new technologies. But with a different purpose and in a different manner than the industry’s history would lead us to expect.