Business Pulse: power and utilities

Emerging challenges

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As well as the top 10 risks and opportunities, our research identified several emerging challenges for which companies must actively prepare.

One challenge is disruption to utilities’ value chains. Although the dominance of the vertical utility chain is being eroded by evolving regulatory regimes and new entrants, the time frame for change is unclear. Large utilities still control the majority of customers, but regulators may force change to encourage competition. As consumers gain more control through technical innovations such as home energy management solutions, they may also vote with their wallets.

Another challenge is the question of energy storage to support renewable generation and smart grids. Whether large-scale rollouts will improve efficiency and effectiveness is far from certain, and decisions made by manufacturers and governments will shape the direction of storage options for utilities.

Meeting the challenges

While utilities face the prospect of value erosion in some areas, a robust forward view recognizes that these risks, as well as opportunities, are key to future success. Utilities are both resourceful and resilient and, in the face of the challenges ahead, they must draw upon these capabilities as well as enhance relationships, reduce costs and improve returns.

Thriving in a volatile environment is not easy, but companies that do so share several characteristics:

  • They are more outward looking and focused on the market
  • They respond smartly and quickly to change
  • They understand what drives cost and value
  • They engage closely with stakeholders and unleash their talent.

All of these remain highly pertinent for executives trying to grapple with an uncertain future.