The journey towards the energy transition

Abstract

This paper brings into focus the strategy issue. As the utilities sector undergoes sea change driven by technological progress, institutional reform and sustainability concerns, longstanding business models are rapidly becoming obsolete and established players are facing growing challenges to their role. In this effervescent, increasingly contended market environment, an extraordinary wealth of business opportunities opens up for companies of all sorts-from large energy firms to local utilities embarking on growth paths via alliances and aggregations, to startups and new entrants from side industries. After reviewing the key technologies impacting the sector and the main pillars of the EU energy policy, the paper delineates three macro-roles for future energy firms. It then stresses the function that smart grids, new digital capabilities, and market segmentation will have in redrawing the structure of the sector. Finally, it suggests that while a balanced mix of old and new technologies is likely to be around and even winning for some time to come, companies that resist innovation and change may soon find themselves as belonging to the past.