Our 50th RECAI discusses how digitisation, decentralisation and decarbonisation promise to transform the retail energy market, and highlights key market changes since the first issue in 2003.
The retail energy revolution
Would utilities or energy investment be better than P&U?
Expanding the traditional utility value proposition
Renewables: finally breaking free
Spotlight on power and utilities mega projects
Power & Utilities Capital Confidence Barometer 15
Building Blocks – November 2016
Renewables: racing ahead of the grid
Power and Utilities Maturity Model and Architecture
Power & Utilities
Helping you master transformation in power and utilities
Power and utilities companies globally face the triple challenge of improving environmental performance, keeping consumers’ costs down and maintaining system reliability.
Our Global Power & Utilities Center can help you meet the coming changes and resulting challenges. We have over 3,500 power and utilities professionals worldwide with the broad experience to help you create strategies for future growth.
Key issues shaping the power and utilities environment today include:
- Reshaping the generation mix and renewing aging networks
Faced with ongoing policy pressure to reduce carbon emissions, the sector has an opportunity to reshape the generation mix completely over the next 30 years, through a mix of technologies. But aging infrastructure means major investment decisions must be taken today.
These will have implications across the value chain as networks respond to different demands from generators and suppliers.
Companies are considering how best to react to the introduction of low-carbon generation technologies, with a host of ongoing ‘make or buy’ questions.
Against the over-riding imperative of maintaining security of supply, key challenges include:
- Deciding on the best generation mix for a particular market
- Navigating policy regimes from country to country
- Funding the acquisition or construction of low-carbon generation assets
- Managing the risks of large-scale construction projects
- Engaging with customers over the value of a low-carbon future.
- Accessing capital in times of austerity
Power & utilities remains a hugely capital-intensive sector. The strategic allocation of available capital and access to new sources of finance will become increasingly important over the coming decade.
Massive investment will be needed to:
- Replace existing generation capacity, while taking account of environmental factors
- Renew and upgrade aging network infrastructure
- Transform today's networks into tomorrow's smart grids.
Since the global financial crisis, P&Us have come under pressure to strengthen balance sheets. This has led to significant divestment programs in Europe, and a new round of consolidation in North America.
Looking ahead, P&Us will have to raise and deploy capital on a huge scale, while engaging with a wide range of new finance providers and protecting credit ratings.
- Making sense of the smart transformation
The introduction of smart technology is an immediate challenge in terms of funding and making the right technology choices for the utility of the future.
The focus of smart today varies.
In Europe and the US, improving consumers' responsiveness to price signals and enabling the connection of distributed renewable power to the network is key. Elsewhere, improving network resilience and allowing large-scale power transmission is often more important.
Either way, matching supply and demand will become increasingly complex.
Longer term, smart technology is likely to cause major disruptions to existing business models and P&Us cannot afford to view it as simply an infrastructure upgrade.
- All significant business processes will be affected by smart technology. Major change programs may be needed to realize potential benefits and keep stakeholders engaged.
- P&Us need to get ready for the reality of 'big data'. Smart roll-outs will result in huge increases in data, and winners will be on top of this, able to handle the increased risks that the data flood brings and use the data to extract added value.
- Individual state regulations supporting customer rights, such as meter opt-out clauses, will affect how P&Us do business.
Smart grids will enable two-way energy flows, encouraging customers to play a new role in determining their energy consumption and putting new strain on existing network assets and mechanisms.
- Market reform and unbundling
Energy reform and unbundling
Energy reform and unbundling (ERU) may be the most fundamental change facing our clients in the P&U sector.
Reforms create the opportunity to build an entirely new electricity market, resulting not only in a more efficient supply of energy, but an environment of increased investment, economic prosperity and social improvements.
Energy reform is complex. Success will depend on navigating many regulatory, strategic and operational challenges.
EY has the experience and capabilities to help governments, utilities and new market entrants manage these challenges, avoid the typical pitfalls of ERU and realize the full potential of a liberalized electricity.
- Women in power
Power and utilities is a sector facing disruptive change. Diversity of thought is key to navigating this change, and turning challenge into opportunity.
Diversity comes in many forms: gender, ethnicity, age and sexual orientation to name a few. We have chosen to focus on gender diversity in leadership as a starting point for utilities. More women in leadership has proven links to improved business performance through increased profitability, return on equity and innovation. These benefits are needed now more than ever.
EY began the Women in P&U Index in 2014. The Index analyzes and tracks the number of women in the boardroom and senior management teams in the top 200 utilities globally by revenue. In 2016, 16% of board members of the top 200 utilities globally were women. With a 1% increase over the past three years, this number is not rising quickly enough to reach gender parity in this generation, or the next.
We believe that accelerating women’s advancement is an economic imperative that creates higher growth, increased prosperity and stronger communities. There are steps that all executives – male and female – can take now to make gender parity a reality, and reap the business benefits.
| Gerard McInnis |
Power & Utilities
403 206 5058
| Patrick Bossé |
Power & Utilities
514 874 4375
| Andy Grainger |
Power & Utilities
519 646 5567
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