The total year end IT spending by Western European utilities is expected to be $9.1bn in 2011, according to a new IT spending forecast report published by IDC Energy Insights.

The report shows that IT services currently make up 61.8% of total IT spending for utilities – the largest share, at over $5.6bn in 2011.

IT services are followed by packaged software and hardware, which account for 20.6% and 17.7% of IT spending respectively.

The report says that electricity companies take the most significant share of IT spending, at 66.8% ($6.1 billion).

The gas and water segments are considerably smaller, but still important, at 16% and 13.1% respectively.

IT spending on sub-technologies by utilities is distributed less evenly for IT services than for hardware, with the report finding that ‘maintenance and support’ leads with 32.7% share; implementations and operations are second and third, with 26.5% and 24.8% respectively.

Electricity companies’ IT spending will continue to have the fastest-growing above-average CAGR between 2010 and 2015 (6.7%), reaching just under $8bn by 2015.

By 2015, the gas sector will have expanded IT spending below average at 5.9% 2010-2015 CAGR, bringing it to $1.9bn by 2015.

Western European gas companies will be spending $1.8bn in IT products and services by 2015, according to IDC report.

IDC Energy Insights EMEA head Roberta Bigliani said Western European utilities’ IT spending will surpass $11.7bn, with an estimated CAGR of 6.2% for 2010-2015.

"While electricity’s IT spending is already the most substantial in 2011, the sub-industry is not expected to lower its spending any time soon," Bigliani said.

"The water sub-industry sector will have the slowest 2010-2015 growth rate, significantly below average at 4.8%, though this is to be expected as companies in the water sub-industry are often smaller, making it more difficult for them to find financial resources to invest in IT.

"Overall, though, utilities’ IT investments will continue to be driven by smart metering 2012 rollouts, operational excellence, cost reductions, and the need to comply with energy policies and regulation."