Transformation in energy, utilities and resources

Strategies to confront rising demand and climate threats

Leaders in energy, utilities and resources companies recognise the unavoidable need for full-fledged transformation, but the complexities remain daunting.

The four building blocks of transformation offer a means to ensure that the vision for the industry’s future is ambitious and aspirational, and that it actually delivers on its promise.

  • Growth in developing economies, led by India and China, will drive demand across energy, utilities and resources sectors
  • Looking more closely at energy-use projections, demand will grow by 20% between 2020 and 2040
  • But efficiency improvements are critical to tempering demand growth. Without energy savings, global energy demand could nearly double by 2040
  • The combined pressure of steep demand and climate-related concerns will impact all industry segments

The demand for energy is far outstripping the rise in global population. At the same time, the world is striving to tackle the issue of climate change by mitigating carbon use. The relationship between these two dynamics — the rise in demand and the recognition of climate threats — will define the strategic choices for the energy, utilities and resources industry.

 

There are four factors that are changing the dynamics in energy, utilities and resources:

  • Pressure on resources: This includes the natural resources that energy, utilities and resources companies produce, and the financial resources available to them
  • Decarbonisation and the sustainability agenda: No matter how energy, utilities and resources companies view climate change, it is clear that their stakeholders are increasingly insisting that the energy and products they provide be cleaner and less carbon-intensive
  • Digitisation and technological advances, along with urbanisation: Data analytics; AI; augmented and virtual reality; digital printing; and other technological advances, such as renewable energy, battery storage, power to X, and carbon capture, utilisation, and storage, are adding to the industry’s proficiency
  • Decentralisation and customisation: Advances in renewable technologies, combined with storage, enable individuals and local communities to produce, use and sell their own energy and create new access to energy

The challenges of demand and conservation apply to a wide range of companies: producers of all forms of energy; disseminators and sellers of electric power, gas, and oil; energy-based process industries like chemicals and steel; and producers of other extracted commodities. All of them will need the acumen to make and execute decisions that combine growth with environmental sustainability, often in new ways.

The four building blocks of transformation

The specific vision for transformation will be different for every company operating in the energy, utilities and resources industries. Steps, stages and organisational designs will vary from one enterprise to the next. There is no blueprint for corporate transformation, but there are four basic building blocks that we find in any successful transformation. They are:

1. Create a strategic identity

Articulate a single desirable future for your enterprise and focus all your efforts on achieving it.

2. Design for trust

Develop ways to attract and deserve the commitment of everyone related to your enterprise — particularly customers and employees.

3. Master the pivot from sprint to scale

Test new practices in an intensive, experimental, startup-style manner. Pick the approaches that work, and rapidly implement them throughout the larger system.

4. Treat your legacy as an asset

Save the best of your past, divest the rest for advantage and use the income to fund the future.

Contact us

Marc Schmidli

Partner, Deals and Valuations Leader, PwC Switzerland

Tel: +41 58 792 15 64