How the Energy Sector Will Look in 2030 and Beyond

  • Innovate — Companies first need to be a lot more innovative, not only in terms of predicting correctly what consumers want but also in terms of how best to serve them and optimise available resources. Technological innovation has served the sector well over the years in many areas of operation including production cost reduction, better resource exploration, saving on system waste and improved connectivity between energy infrastructure and smart grids. For example, using the Supervisory Control and Data Acquisition (SCADA) system for locating oil reserves helps optimise oil drilling, and enhanced oil recovery (EOR) methods help increase oil recovery from the same wells. Still, there is a lot of scope for improvement, especially in the newer energy areas. For example, the plant load factor of solar and wind power projects have improved over the past decade but are still nowhere close to those of traditional power plants to make them a reliable source of electricity. Better data analytics on wind speed, direction and solar position could help improve the reliability of the system. Other energy sectors also offer opportunities to improve, and companies could explore these to get ahead of the competition.
  • Invest for the future — Investment is necessary not only to maintain the current scale of operations but also to prepare for the future. Investment in improving current operations, newer technologies, data mining and data sciences, artificial intelligence and robotics will go a long way in bridging the gap between where companies are currently and where they need to be in the future. The competitive edge of energy companies would depend much on how quickly and efficiently they can optimise their business models to meet new requirements. The International Renewable Energy Agency estimates that annual investment in renewables needs to increase from around USD300bn/year currently to more than USD800bn/year by 2050 to meet key targets under the global climate goal 10.
  • Diversify — In this rapidly changing environment, companies cannot afford to continue operating in niche segments and risk losing out when newer entrants with new technologies start taking away market share. They need to expand their horizons so they are ready for the change when required. They need to be agile and collaborative on multiple fronts. Traditional business could still be the mainstay of organisations, but companies could use the existing skillsets and technical knowledge to explore new opportunities in emerging sectors and invest appropriately. It is also important to diversify business relationships and partner with service providers, vendors, outsourcing companies and the gig economy to bring more flexibility and creative thinking to projects. Shell, BP and Total are some of the big companies investing heavily in next-generation energy sources, including solar and wind power plants and charging infrastructure.
  • Invest in infrastructure — One of the major risks for organisations in the energy sector is stranded assets. Building infrastructure entails significant investment, and it would be a strain on a company if a particular asset needs to be written down or closed prematurely or, in the worst case, becomes a liability. The best way to counter the problem would be to evaluate the project consistently during its life and make changes as and when necessary. Access to relevant market data and using data science could help the organisation keep track of the changes and make the right decisions. Another option could be to make the infrastructure adaptable if required, without significant investment. For example, a retail petrol outlet could be built in a way that if required, it could be easily converted into a charging outlet.
  • Engage — The transformation could bring radical changes, and companies need to be open about these changes to stakeholders to prepare them for the future. The labour force may need to be reskilled and reallocated to match emerging requirements. Management also needs to guide employees on the direction of the organisation and train them for new tasks and responsibilities. Outside the organisation, it needs to communicate with society about the new possibilities and how these could benefit society. This would not only help the company foster better relationships with consumers but also understand consumer preferences and better predict demand.
  • Digital — Digital technologies have been advancing rapidly, making customer engagement more informative, interactive and fun. Artificial intelligence, the internet of things and cloud-based services make it easier for companies to enhance performance and deliver better results. Going digital could also help improve communication with suppliers and partners to better manage infrastructure. Digitalising electricity or gas networks enables two-way communication between all market participants, helps overcome inefficiencies in the system and prepares companies to respond better to demand/supply variations. Hence, digitalisation could improve the reliability, stability and availability of grids and build a good reputation for the organisation.



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Acuity Knowledge Partners

Acuity Knowledge Partners


We write about financial industry trends, the impact of regulatory changes and opinions on industry inflection points.