- [Narrator] Energy and power providers
face choices that can truly make or break their companies,
depending on how they respond to some very acute challenges.
The imperatives of decarbonization and sustainable energy
have created new market environments
nearly everywhere in the world.
And new regulatory regimes have some major implications
for the present and future of companies in this sector.
- Even in emerging markets,
growth from electrification will be largely offset
by energy efficiency.
In mature markets like that of the US,
there may be no growth at all in power demand,
and demand for gas is likely to shrink.
Substantial efforts across the entire utility value chain
are required for companies to cut costs and lower prices -
while ensuring security of supply.
Affordability of energy and power is,
and will remain, a major issue everywhere.
As a result,
government regulation is likely to de facto cap the ability
of all energy and power company to pass through their costs.
- Power grids need to be equipped
to deal with the variable loads occasioned by renewables.
Power systems need backup capacities
that are both decarbonized
and capable of ensuring security of supply.
We need infrastructure, such as electric car charging,
heat recuperation networks, hydrogen and CO2 transmission.
And companies must invest in these at the same time
that growth and margins are being severely constrained.
So what will leading energy and power providers do
to meet these challenges?
It won't be easy for companies to maintain
the financial muscle to invest in new infrastructure,
because growth in their current businesses and profits
are effectively capped.
So the winners will be those who become much more efficient
and effective in their operations and capital deployment.
This is all the more important
because competitiveness will be crucial
for winning in new growth areas.
- The leading energy and power companies
are those that get the maximum impact from technology
to become more efficient and competitive.
Too few digital or AI initiatives today
deliver their full potential.
Getting impact from technology implies
attracting the right talent,
genuinely reviewing its operating model
in sync with the technology,
and providing more autonomy and accountability
to teams close to the action.
- Successful energy and power players
also determine in which growth areas
they can become legitimate competitors.
The potential growth areas exist in building new networks
or developing new infrastructure for use with renewables.
When they have determined in what new growth avenues
they can win, success will require
focused managerial attention,
discipline in capital allocation,
agile operating models,
and developing the right capabilities.