The electricity sector is positioning decarbonisation, investment in renewables and the provision of new value-added services to consumers among the main pillars of its transformation process towards a new business strategy, which has been threatened by climate change, decentralisation and digitalisation.
This is the conclusion of the study ‘Global Power Strategies’, carried out by Strategy&, PwC’s strategy consultancy, which analyses the different paths being taken by the forty largest electricity companies in the world in terms of market capitalisation, those integrated in the Global Top 40 index.
In the first place, the sector’s strategy is to leave behind the “conservative” model that has focused in recent years on regulation, capital investment and basic customer service.
Decarbonization is one of the main pillars of this new strategy, as confirmed by the latest data. Five years ago, coal accounted for 18% of the electricity generation mix in Europe, now it has been reduced to 12%.
However, this reduction has not been as intense in all geographical areas, as in North America it has only been reduced from 47% to 41% and in Asia-Pacific from 37% to still 35%. As a result and due to other factors, European utilities are still ahead of the rest.
At the same time, companies are increasingly investing in distribution networks and renewable generation sources. In this case, European electricity companies are also “much more active than the rest”, devoting 30% of their investments to renewable projects, for 7% of the North American ones.
Self-consumption, mobility and intelligent homes
Other strategies include the development of new value-added services for consumers, especially in the areas of electric mobility, intelligent homes, self-consumption, distributed energy and energy storage.
“The sector is in full transformation. By the end of the next decade the industry will be completely different from how we know it today. The energy transition, the development of value-added services, the greater use of clean and efficient technologies are going to be on the agenda for the coming years, where innovation and new business models are going to be at the centre of companies”, explains Carlos Fernández Landa, the partner responsible for Energy at PwC.