Handbook Utility Management edited by Roland Berger CEO Burkhard Schwenker and Andreas Bausch reveals challenges for power and gas supply

• Western European electricity market growing slowly (2.1% p.a.) compared to China (6.5% p.a.)
• To grow just as fast, utilities need to enter emerging markets and spend over 50% of their overall investment in these markets by 2030
• Articles from well-known CEOs and experts including Fritz Vahrenholt, CEO of RWE Innogy GmbH, Werner Brinker, CEO of EWE AG, BASF Chairman Jürgen Hambrecht and many more
• The handbook covers power generation, energy trading and wholesale, transmission and distribution, retail and special issues

With the increasing deregulation of European utility markets, competition has become fiercer in the utility industries over the past few years. Regulatory changes towards an integrated market environment have created new challenges for the management of electricity and gas companies. As the Western European electricity market is growing slowlier than the Chinese for example, firms now need to realign their strategies and enter emerging markets with an overall investment of over 50% in these markets by 2030. The Handbook Utility Management reflects current challenges in the utility industries and provides solutions from a managerial perspective. It includes the latest findings from top managers, researchers, experts in utility-related investment banking and consulting, and professionals in public and supranational organizations on all value chain activities within the industry.

"Growth is the core of every corporate strategy. Only growth creates the momentum that is needed to boost earnings above average and create jobs," says Prof. Burkhard Schwenker, CEO at Roland Berger Strategy Consultants, in the new publication. "From a global perspective, however, few industries match the sheer variety of conditions for growth that the utility industry must meet", he states and points out the specific challenges for growth strategies in the utilities industry. Schwenker edited the handbook that provides solutions for these challenges together with Andreas Bausch, who has been Professor of Strategic Management and Controlling at Jacobs University Bremen since 2004 and also Professor of International Management at Friedrich Schiller University in Jena since 2006. The book is aimed at professionals in companies as well as researchers in the utility sector. As competitive pressure has increased and the regulatory framework has changed significantly in the past few years, the book reveals the challenges of this industry and offers strategic approaches for tackling them from a managerial perspective. As Schwenker says, it is even more important today to facilitate growth through strategic realignment. To achieve this, new perspectives and approaches are essential.

Emerging markets grow faster than those in Western Europe

Especially for utility companies, growth strategies must take into account several industry-specific challenges. For example, energy companies in Germany must deliver long-term shareholder returns of around 9%, although growth is fairly low in incumbent markets. Between 2010 and 2015, the electricity market in Western Europe will grow by just 2.1% p.a. compared to growth rates of 4.1% in the former Soviet Union and 6.5% in China. Therefore, to enhance growth, European utility companies will have to enter these emerging markets.

Regulatory pressure forces companies to invest

In the past few years, governments have started to liberalize markets while increasing and tightening rules and controls. "Deregulation in the utility industry has increased firms' strategic options. Employing the techniques of value-based management with reference to strategy development, mergers and acquisition and performance management can help firms to take the right action now," says Professor Bausch. Regulatory changes such as Germany's withdrawal from nuclear power and the EU's efforts to foster renewable energies are also forcing companies to invest. Many power plants have been in service for decades and need replacement. Furthermore, new technologies require an adequate infrastructure.

Handbook for managing major challenges

Leading professionals, researchers and top managers in this field have put together a handbook that provides not only an overview of challenges and regulatory changes in utilities, but also strategic advice and solutions from a managerial perspective. "Whatever path a company chooses, growth places heavy demands on management – professionally, and also on a very basic human level," states Schwenker. The book thus aims to provide a foundation for decision-making and managerial knowledge for researchers. A number of well-known experts contributed to the variety of topics in the 808-page book. The chapters include:

• The Utility Industry in 2020 by F. Starace (Enel S.p.A.)
• The Changing Structure of the Utility Industry from the Perspective of Regulation Authorities by M. Kurth (German Federal Network Agency)
• The Changing Structure of the Utility Industry from Its own Perspective by W. Brinker (EWE AG)
• Unbundling – Strategic and Organizational Challenges for Power and Supply Companies by L. Atienza Serna (Red Eléctrica de España)
• Energy Trading, Emission Certificates and Risk Management by R. Huisman (Erasmus University Rotterdam)

According to a survey among top managers, 42% feel that corporate leadership is the relevant force that drives growth. Managerial skills are therefore essential for decision-making and the handbook gives expert advice on this matter. "Managers must respond to the ever faster pace of change with intellectual flexibility. The demands on managers have never been as challenging as they are today," says Schwenker.