Energy & Natural Resources (ENR)

Power & Utilities

Deals Activity: High

Restructuring Activity: Very high

The sector faces enormous challenges across the board, including global energy price volatility, increased regulation and further infrastructure investment.

Deals activity in Power & Utilities

1. Deal numbers have grown in recent years, largely driven by the stress in the market.

2. We're likely to see further deals in the medium-term as consolidation remains pivotal to reducing cost-to-deliver.

Restructuring activity in Power & Utilities

The increase in wholesale oil and gas prices resulting from the conflict in Ukraine has placed operational and financial pressures throughout the supply chain.

Government support measures have allowed energy suppliers to recover their costs and there have been fewer supplier failures in recent months. There is, however, a growing risk of consumer payment default, especially as unit energy prices remain high.

The water sector is also seeing the emergence of stress resulting from highly-geared businesses and recent increases in interest payments. Regulator demands for major improvements to infrastructure

Power & Utilities

The sector proved resilient during the pandemic, keeping the lights on and water flowing.

But with the backdrop of increased geopolitical tensions set to persist, the sector will need to manage a range of factors:

Wholesale price volatility

Managing costs will remain a focus for most suppliers. While B2C customers have been insulated from the worst of the spikes by the UK government's energy price guarantee (compensating suppliers for the difference between the market rate and new market cap), the long-term situation for B2B customers is less clear. Providers will need to manage their energy buying carefully.

Increased bad debts

Even with the price guarantee, the cap this winter is still more than two times higher than a year ago. There’s a real risk of increased bad debts across B2B and B2C customers as floundering businesses fold and households struggle to pay on time. Consumer groups are already warning fuel poverty is a major issue, with 13% of UK households deemed to be fuel-poor even before 2022 price hikes. With very tight margins, any material uplift in bad debt provisions has the potential to cause significant cash and profitability issues for suppliers. We’ve already seen Ofwat agree to permit a temporary increase in prices to non-residential consumers to allow for growth in anticipated bad debts, while Ofgem is also consulting with the sector.

Increased regulation

The power and water markets are tightly regulated on principles of consumer protection. Ofgem licensing requirements and complaints scrutiny are likely to tighten, with the energy price cap set to remain in place for the foreseeable future. In addition, regulation around the provision of smart meters, Renewable Obligation Certificates (ROCs) and wider infrastructure improvements are likely to intensify – increasing costs and operational complexity. In water, greater public and regulatory scrutiny on company performance is likely to drive up investment requirements.


The move towards renewable energy has required major changes to production and distribution across the National Grid. This is likely to remain a key focus for utility providers over the long term. The UK is rapidly losing large volumes of baseload (nuclear) and flexible (coal and older gas) generation capacity as the mix pivots towards low/zero-carbon alternatives. Major investment and an effective Contracts for Difference (CfD) government support mechanism means the UK already benefits from a large renewables resource base.

Utility providers of all sizes have needed to become increasingly agile and cost focused. Managing liquidity is essential, as well as taking a prudent approach to bad debts.

Calon Energy Limited in administration

We were appointed as administrators over this leading Independent Power Producer in the UK, with a 2.3GW system-Critical Combined Cycle Gas Turbine (CCGT) portfolio across three sites. The power stations were placed into a 'deep preservation’ state and we worked alongside management to develop new business plans for the operating companies.

Spark Energy Supply Limited in administration

Initially engaged to assess strategic options following withdrawal of major funder support, we helped identify a buyer, but this required the insolvency of the trading business. This preserved 440 jobs and we facilitated the transfer of supply for 280,000 customers, representing the largest retail supplier to go through a SoLR process to date.

Project Rolstad

We reviewed the business plan and advised on options for a syndicate of lenders to a developer/operator of standby and flexible power capacity. This included a full IBR and contingency plan. We negotiated amendments to the facility agreement alongside a fresh equity injection and introduced a new chairman to address governance/control issues.

Energy Wholesaler

We helped an energy wholesaler evaluate its options following a spike in wholesale prices. Using our transformation expertise and specialist energy sector, we developed and implemented a strategic turnaround of the business. Our work retained shareholder value, preserved jobs and avoided disruption to energy retailers and their customers.

Find Your Expert

James Fagan is Interpath Lead for the ENR sector, which includes Power & Utilities as one of four core segments. James Camp leads our approach to Power & Utilities nationally, with transactional and advisory support from Alan Flower. For a full list of our senior people with experience in the sector use the button below.

Our senior team