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Next in energy and utilities 2023
Reinventing and reinvesting for your customers
Energy and utility companies share a common desire with their customers heading into 2023: affordability. Homeowners, families and workers want to make their hard-earned dollars stretch even further while prices for products and services remain high. Commercial and industrial customers want to curb costs while supply chain and labor concerns are still a factor.
The energy and utility companies powering and fueling transportation, businesses and homes know affordability is not only good for customers and society at large, but it affects everything from credit ratings to regulatory and financial outcomes. This affordability factor is further complicated by the demands to meet the ever-growing energy needs from traditional sources while sustainably and equitably advancing the cleaner energy transition in a way that enhances reliability and energy independence.
The industry’s strategic reinventors will continue to explore new ways to balance these important goals with 2023’s real obligations and uncertainties. As a leader, your opportunities may come from reinventing, which could mean continuing to explore new services, offerings and strategic business relationships. It may also come from reinvesting in the business — from embracing new technologies that help you serve customers better or operate at a lower cost to expanding environmental, social and governance (ESG) goals. Here are five ways we see energy and utilities reinventing and reinvesting in the year ahead.
Five energy and utilities focus areas for 2023
- Finding the untapped growth opportunities in your customers’ unmet needs
- Changing the disrupter versus incumbent conversation
- Amplifying the cleaner energy momentum in new ways
- Continuing to move from theory to tech-enabled ESG action
- Connecting the unconnected to further enable the energy transition
Finding untapped growth opportunities in your customers’ unmet needs
As you lead the cleaner energy transition within the energy and utilities industry, you may also have an opportunity to help others outside the industry do the same. To help you gain more insights into your commercial and industrial (C&I) customers, we asked more than 1,000 strategic and operational leaders from some of the most energy-intensive sectors across the US to share their plans for energy and carbon reduction as well as other energy-related investments.
In this PwC 2023 US Large Energy User Survey, most C&I respondents report having comprehensive energy strategies that prioritize moving to renewables, adopting new technologies, reducing energy costs and improving reliability — among other top goals. They’re making progress and have a desire to do even more. That’s where your opportunity comes in. Those surveyed are looking for help across the board — from deciding what initiative to pursue and understanding the financial impacts to the installation and ongoing maintenance of equipment. And, as it turns out, traditional utilities and integrated energy companies may be well-positioned to help.
The takeaway: If you’re not talking to your largest customers about their energy or carbon reduction needs, start the conversation today.
Changing the disrupter versus incumbent conversation
Emerging players stepping in with renewables, battery storage or other energy as a service offerings can often be considered a threat by traditional utilities and integrated energy companies in this space. Our survey revealed insights that may change the us-versus-them conversation for good.
Not only do more than 90% of commercial and industrial company leaders tell us they want external support for significant energy initiatives, certain qualities may factor into the selection. Respondents say working with an “established energy-focused company with tried and true practices” is most important to their organization — the top ranked response. It should be noted that an “innovative company new to energy with novel ideas and the latest technology” was the second-most-selected top response. Therefore, long-time providers, like utilities or energy companies, may be one of the strongest frontrunners to step in and provide support. You may be even stronger if you team up with emerging players or known technology providers to help these customers.
The takeaway: To seize this opportunity, you may want to evaluate your current services, capabilities, strategic relationships and acquisition opportunities to see what moves and investments could put you in an even better position to help your customers and grow your business.
Amplifying the cleaner energy momentum in new ways
The industry’s strategic reinventors will not only help their customers succeed, they can further the cleaner energy transition by continuing to invest in, develop or commercialize solutions related to clean energy. Government incentives, such as the Inflation Reduction Act (IRA) and Infrastructure Investment and Jobs Act, are expected to make cleaner energy more economical and attainable for the next decade — something that will help energy and utilities advance the energy transition in an even more affordable and equitable way.
We’re hearing from executives across industries that they plan to increase M&A in the year ahead. In our sector, the IRA is expected to encourage more deal activity and investor interest specifically in cleaner energy assets and technologies. This momentum may already be building. For instance, power and utilities saw a noticeable uptick in renewable deals following the passage of the IRA. We’re also seeing more energy companies use recent profit margins as an opportunity to further ESG efforts by expanding into carbon capture, renewables, liquefied natural gas, hydrogen and biofuels. By the end of 2023, energy and utility portfolios, strategic relationships and joint ventures may look a lot different than they do today.
The takeaway: The most strategic and proactive leaders will likely connect the dots between available incentives and their own enterprise-wide sustainability, growth and portfolio goals.
Continuing to move from theory to tech-enabled ESG action
Your net zero or carbon reduction commitments have likely been made. Now, you’re working to close the gap between the ambition and the actual operationalization of these commitments. In 2023, we see energy and utility leaders continuing to make solid progress on this front, taking a balanced and methodical approach to ESG and related actions. This doesn’t mean the urgency has diminished. Companies are starting to form a clearer view into the complicated roadmap forward — and the related compliance, operational and technical implications.
Leaders know you can’t manage what you can’t regularly measure or monitor. Therefore, the rapidly evolving ESG systems for tracking and recording ESG data as well as breakthrough technologies for decarbonization will likely be increasingly important considerations in the year ahead.
The takeaway: Real progress is expected to be made by energy and utilities leaders who continue to ask, “What does good look like?” This applies to everything from embedding climate risk into corporate strategy, creating more investor and audit-ready reporting practices, understanding Scope 3 implications across the supply chain and every other step between ambition and operationalization.
Connecting the unconnected to further enable the energy transition
Emerging technologies and cloud-based solutions are important factors for all businesses in 2023. For energy and utilities, we see them continuing to play a crucial role in innovation, while enabling the energy transition at a lower cost and faster pace.
Leaders should view the cloud not as a singular destination or a series of efforts, but as the connective tissue, or connected platform, that can help you create end-to-end interconnections that increasingly matter — from home EV charging or customer payment apps to your operations or infrastructure. This isn’t about overcomplicating your technology roadmap. It’s about simplifying and streamlining in a way that helps you connect your people (front and back office, field crews, etc.), customers, assets, suppliers and information in new ways.
The takeaway: By embracing the cloud ecosystem as the fabric that connects everything, energy and utilities can create seamless operations as well as customer and employee experiences, all while enabling a quicker, more predictable evolution of our industry.
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