Your business environment is changing– and changing fast. Big moves in our society, the economy and the political landscape – combined with emerging technologies – demand a response from all of those in the utilities and built environment sectors. Awareness is the first step.
The shifts are often referred to as macro trends. I prefer to think of them as ‘big ticket’ items. Here are a dozen that really matter:
- Demographic differences. As the make up of our population changes – growing, ageing and becoming more increasingly urban – so the challenge for utilities and built environment specialists intensifies. In the UK the portion of the population over-65 continues to grow. It will increase by 12 per cent in the next five years while the general population grows by 3 per cent. Meanwhile, according to United Nations estimates, the share of the world’s population living urban environments – just 13 per cent at the turn of the last century – will hit 70 per cent by 2050. All this means increased strain on water, transport and power infrastructure – and a search for new solutions and the creation of new business models.
- Global economic crisis. Kicked off by the banking liquidity crisis of 2007/08, the global economic crisis has marked the longest recession in a generation and remains a cause for on-going volatility and uncertainty today. Economic sentiment remains weak and the impact on the built sector is still being felt. However, a weak economic climate is an opportunity to innovative technologies that in turn generate greater productivity and lead to real economic growth. In a far-reaching report into the opportunities presented by BIM (building information modelling), the NFB wrote: “The industry will need to make this leap at a time when resources are most stretched and when the battle to win work and survive is the day-to-day reality for many.” Never let a good crisis to go to waste, in other words.
- Energy market reform. When the UK government laid out electricity market reforms in 2012 it was to address three interlocking issues: security of supply, climate change and affordability. All have consequences, intended or otherwise. For example, the government’s target of 15 per cent energy generation from renewables by 2020 is making new demands on the electricity grid, with the increase in small scale (business and domestic) power generation. Designed for centralised generation, distribution and supply, the UK’s energy infrastructure will need to adapt to accommodate this more distributed model.
- Technology – and sensor technologies in particular – will come to the fore in addressing this challenge. As the history of technology dictates, the price of sensors will fall dramatically as adoption rates take off. In the last decade, for example, the cost of compute has nose-dived – a 60-fold reduction to be precise. Meanwhile, the popularity of open-source Arduino sensors used in scientific equipment, automotive diagnostics, drone manufacture – among other applications – demonstrates the potential for utilities and the built environment. Finally, the coming together of operational technology – think GPS and device monitoring, for example, – and information technology is likely to have a positive impact on productivity and innovation.
- Climate change – The 2008 Climate Change Act commits the UK to reduce carbon emissions by at least 80 per cent in 2050 from 1990 levels. This goal has implications for energy and construction sectors alike, making additional demands on day- to-day operations, rethinking business processes and offering a potential opportunity for growth. According to the government’s own figures, the low-carbon economy is worth £26bn.
- Energy price volatility. The price of fossil fuels – oil, in particular – continues to fluctuate. After several years when prices stabilised at just over $100 a barrel, sharp declines in the price of oil followed from June 2014. While this has had a largely benign affect on the construction and engineering sectors, it has added to the pressure of some within the energy sector. This in turn is acting as a stimulus to generate additional energy as well as optimise existing energy usage to reduce costs. The use of organic biomass and combined heat and power (CHP) plants are examples of both in action.
Some of these big ticket items should inspire creativity and present new opportunities. Others present threats that will need to be overcome. Ultimately, how you respond is up to you – but respond you should. The alternative – business as usual – simply won’t cut it in the world of macro trends.