Updated: May 9, 2022
The global community is at the crossroads of a tremendous energy transformation. According to research, Global demand for all types of fuel and power will be four times more by 2040 than it was in 1990. Global climate change will have progressed from the periphery to the centre over the same 50 years. Institutions around the world will be attempting to solve climate-related issues by drastically reducing and mitigating carbon use.
The link between these two issues, the growing preference and identification of fossil use as a climate hazard, is already impacting fundamental strategic options in the energy, utility, and natural resources sectors. And it will do so for many coming years. This trend will have a significant amazing array of businesses, including energy providers of all types, electric power disseminators and dealers, resource process sectors like chemicals and steel, and producers of other extracted resources. Management in all of those enterprises will need the foresight to adapt and carry out decisions that balance sustainable growth with environmental sustainability in a variety of ways, frequently in unexpected ways.
It's not really assured that organizations, particularly those that have been consistently successful, will be able to adopt this current management method. As a result, firms' capacity to make major alterations in approach, business model, and daily operation will be on the schedule this year, and with a greater feeling of necessity than in previous years. Businesses now have more instruments and possibilities than ever to thrive as a result of the growth of digitalization, the expanding usage of interconnected platforms, and increasing awareness about the importance of renewables.
Four elements are converging to disrupt the dynamics in the Power utility and Natural resources sectors — and present response tools:
Reduction of carbon emission and the goal of sustainable Environment: Whatever perspective Energy companies take on climate change, it is evident that their constituents (clients, investors, workforce, policymakers, and the broader population) are progressively demanding greener and less carbon-intensive energy and related goods. In related industries such as industrial manufacturing, automotive, and agriculture, the emphasis put on sustainability will continue to rise. The use of fossil fuels for transit is being questioned, particularly in Western Europe and China. Companies in the energy and utility sector that come up with new approaches to provide remedies will be praised in innovative ways.
Resources are under strain: Both natural resources and financial resources supplied by Energy and utility firms are in high demand. High demand will continue to be a concern if supply does not expand in tandem with the rapidly growing middle class. As a result, energy and resource efficiency are becoming increasingly important. Circularity approaches to commodities in which provisions are made for the sustainable disposal of commodities, and the invention of slightly lower resource-intensive products and services, such as digitalized printing technology or online solutions.
Urbanization, as well as digitization and technology advancements: Digitalization such as information technology, robotics, big data, enhanced and virtual worlds, screen art and other advancements in technology, such as renewable energy (wind, solar, biofuels); battery technology; power to X (conversion between gas, hydrogen, and electric power); and carbon capture, utilization, and storage (CCUS), are enhancing the Energy and utility industry's skill set. When these technologies are coupled, even more, transformational prospects arise. Smart grids, for instance, allow real-time trade, consumption, and sales prices of fluctuating renewable energy sources like wind and solar while also maintaining the grid balanced. As the world becomes more urbanized, demand for these types of safe, effective, and sophisticated systems will increase. Digitization and new tech are also altering the market structure in Energy and utility industries, allowing new players and rivals from out of the industry to gain a competitive edge.
Customization and decentralization: Persons and smaller towns can now generate, utilize, and trade their personal energies thanks to advancements in green tech mixed with storing, coming up with innovative energy access (such as sustainable water generation by desalination). This democratization of energy and resources is accompanied by a greater emphasis on the final user. It allows Energy and utility enterprises to skip the conventional value stream and shift away from commodity goods and services toward elevated specialist goods and services. Focusing upstream, increasing demand for critical metals used in storing energy, such as lithium, cobalt, lead, and nickel which are putting pressure on producers.
As a consequence of these reasons, many Energy utility businesses are faced with a variety of issues that technical answers cannot address. Leaders must envision a brand portfolio and establish connections with a much larger group of partners to identify that their business is ecologically sound. Management must proactively address pricing instability, earnings growth, and cost reduction to ensure their firm's earnings stability. Those in control must re-evaluate marketing strategies and much more efficiently spend resources to guarantee that their organization is appropriately positioned for main contributions.
Executives in the Energy utility industry have made progress in each of these categories, but it is now the opportunity to incorporate them all as one. The change that results could be accomplished in a large single undertaking. It might also be organized as a collection of small projects, each generated in the previous efforts. The objectives are the same across all instances: to transform the business's daily operations and ethos enough just to allow it to earn money in this way it would never previously, as well as to create a command of yet more transformation among executives and workforce.
BARRET, D., 2021. [online] Mona.uwi.edu. Available at: <https://www.mona.uwi.edu/physics/sites/default/files/physics/uploads/Energy%20and%20Climate%20Change_ENBAR.pdf> [Accessed 17 August 2021].
DELLOITE, 2021. Digital transformation in the utilities industry | Deloitte US. [online] Deloitte United States. Available at: <https://www2.deloitte.com/us/en/pages/energy-and-resources/articles/digital-transformation-utilities-customers.html> [Accessed 16 August 2021].
PWC, 2021. [online] Available at: <https://www.pwc.com/gx/en/energy-utilities-mining/pdf/transformation-in-energy-utilities-and-resources.pdf> [Accessed 17 August 2021].
PWC, 2021. [online] Available at: <https://www.pwc.com/ua/en/industry/energy-and-utilities/assets/pwc-global-survey-new.pdf> [Accessed 17 August 2021].