The flexibility energy companies display in responding to today’s dynamic market conditions will determine their future success.
Energy. Where it comes from. Who supplies it. How we use it. It’s all changing. The global energy sector is on the brink of a consumer-led, technology-enabled transition, and the balance of power is shifting fast.
The energy transition will be one of constant evolution. By 2040, energy demand will rise by almost one quarter, due largely to population growth and urbanization. Renewables are expected to reach 40% of global generation compared to 25% today, as countries pursue decarbonization. Innovations will make off-grid solar and wind generation, electric vehicles (EVs), battery storage, etc., more accessible and affordable. And emerging technologies, such as artificial intelligence, big data analytics, blockchain and the Internet of Things, will support insight-driven decisions that optimize the supply of energy – as well as enabling tech-savvy, discerning consumers and competitors from outside the industry to disrupt traditional business models.
This means that by 2050, the energy system will be virtually unrecognizable to that of today. And in this new world, electricity will increasingly be the fuel of choice.
But, as global energy systems become cleaner, cheaper and more efficient, electrification will upset the energy mix. The use of oil as a transport fuel will face stiff competition from battery technology. Natural gas will replace coal as the world’s second-largest energy source, buoyed by demands from industry and power generation. And renewables will challenge gas as technologies become more economically viable.
Business models, systems and controls will be disrupted, with risks and opportunities mounting. Managing such significant, interdependent changes will demand flexibility from energy companies as they adjust to the new normal.