PCCA Journal|1
st
Quarter 2015
12
markets produce 5- to 7-year cycles that coincide with the
economy. This market has resisted these cycles because
growth is not solely derived from economic factors but a
combination of economic and “derived demand” incentive.
Derived demand is produced through government regulation,
safety, environmental, or other actions. The drivers of electric
and gas growth include improving housing starts, tax credits,
continued pipeline replacement, pipeline safety regulation,
environmental regulation and concerns, distributed genera-
tion
1
, electric transmission expansion, and the beginning of
an industrial and power generation renaissance.
Electric Transmission & Distribution
The most disruptive, long-term
driver in the electric T&D market is
distributed generation. Why does
distributed generation impact the
electric T&D segment? Simply put,
it will reshape how the entire elec-
tric industry operates.
In Exhibit 3, we offer a forecast
of the development of the power
generation market. This market
completed a current wave of
activity marked by replacement
transmission construction driven
by aging infrastructure and bring-
ing remote wind power into the
grid. Distribution spending follows the economic cycle and
housing starts, peaking in 2007 and slow since then. By the
2030s, we anticipate a market that is deemphasizing tradi-
tional utility-centric power generation and expanding the
“smart” distribution and transmission grid infrastructure to
serve as a form of “insurance” capacity for sites that produce
too much or too little distributed generation power. We see a
market similar to the buying of insurance, intended to cut the
downside of loss, where sites are protected from producing
too little or too much power by purchasing capacity and ac-
cess to the grid. This transformation will demand a nation-
wide upgrade of the distribution and transmission grid. Can
distributed generation truly drive this type of change?
6UJMJUZ 0VUMPPL
Continued from page 11
Exhibit 2
Exhibit 3