Featured sector: Utilities

Government policies and regulatory requirements have provided strong investment incentives over the last few years. In the energy sub-sector renewable energy projects have become more common, and have provided an increasing amount of work around the UK.

High levels of investment have buoyed the level of sector activity: The value of underlying project starts rose consistently between 2006 to peak in 2011. Last year saw underlying starts decline as the flow of projects dipped from the 2011 peak, however the 16% decline still put starts last year at levels above any year prior to 2011. The dip in starts last year came as a result of fewer water and renewable projects starting on site and despite the decline work in both these sectors was still firm compared to pre-2011 levels.

Utilities starts in 2013 have been mixed, the first half of the year saw starts decline from 2012 levels, but the third quarter saw a strong resurgence in work as renewables projects filled the gap in the pipeline. The outlook for the remainder of the year and the first half of next year is for continued growth in starts, with full year gains forecast for 2013 and 2014.

The construction of a twin nuclear reactor at Hinkley Point now looks set to go ahead, with the government guaranteeing a price for the electricity it will produce. Expected to start on site in June 2014, the project should provide £6bn of construction work over four years.

We expect the positive performance to continue into 2014 and are forecasting some marginal gains for this year, with energy related projects continue to drive the gains.