Low-Carbon Energy Transition Can Create Up To €380 Billion in New Annual Value for Utilities, Finds Accenture and CDP Report
Five business models can secure growth in a low-carbon world
The shift to an efficient and low-carbon energy system could create
between €245 billion and €380 billion in new annual value for the global
electricity utilities industry by 2030, finds a new study by Accenture
(NYSE:ACN) and CDP, which examines the sector’s opportunities to grow
and improve competitiveness while meeting environmental targets.
This revenue and efficiency opportunity is based on six areas that could
drive business value for utilities, according to the study. Utilities
can cut waste in power generation, develop low-carbon electricity
sources and install carbon capture and reuse technology. The Accenture
Strategy and CDP
report also points to opportunities in new energy efficiency services,
distributed generation and the flexible management of electricity supply
and demand through advances in storage and other technologies.
Capitalizing on this opportunity would require the sector to transform
its business models, according to the report, “Low-Carbon,
High Stakes.” In particular, Accenture
Strategy calls on utilities to consider decoupling electricity
generation revenues from sales volumes, divest non-core assets and
businesses, and form more cross-industry partnerships.
The report examines five business model pathways toward a low-carbon
energy system and analyzes their environmental and economic value, as
well as the capabilities that utilities need to realize them. It assumes
a future scenario of limiting the long-term increase in the average
global temperature to 2°C.
“The global response to unmitigated greenhouse gas emissions and water
scarcity will put the existing electricity generation and supply model
at risk and threaten the bottom line of utilities,” said Peter
Lacy, managing director, Accenture
Strategy. “To sustain growth, improve competitiveness and drive
business value, the industry must be ready to transform and take
advantage of the business opportunities that arise from a low-carbon
energy system.”
Accenture Strategy and CDP identify six emerging value pockets that are
potentially worth €135 billion to €225 billion in saved and avoided
costs, and €110 billion to €155 billion in new revenue per year
worldwide in 2030. In total, this brings the potential value available
to between €245 billion to €380 billion per year in 2030:
-
Energy-efficiency in power generation could create €35bn-€55bn
in value a year from savings in operational and CO2
emissions costs.
-
Demand for energy-efficiency could generate €65bn-€80bn a
year through providing energy-as-a-service. Electric utilities could
offset losses from reduced demand by capturing a share of the growing
market for energy-management products and services. This could be
supplemented with rising demand for electric vehicles, which could
generate an additional €35bn-€45bn a year.
-
Low-carbon power generation can create the largest opportunity
of €100bn-€160bn a year. Revenues from renewable electricity
would offset the losses from displaced fossil fuel generation.
-
Local distribution of low-carbon energy generation could drive €10bn-€20bn
a year. Utilities could support local low-carbon generation by
individuals, businesses or communities through products and services
supporting solar PV, microgrids, or peer-to-peer renewable energy
exchange.
-
More flexible management of the energy system, including the
use of electricity storage to balance supply and demand, would reduce
grid operating and balancing costs, potentially creating €35bn-€55bn
of value a year. While this makes a modest direct contribution to
emissions reduction, it can save more emissions throughout the energy
system.
-
Carbon capture and reuse technology could create value through
avoided emissions costs and drive the reuse of carbon-based products
in industrial applications like cement production or agriculture. It
will be worth up to €10bn a year by 2030 and increasing
thereafter.
“The growing relevance of sustainability concerns in our daily life is
opening up new opportunities for electricity utilities,” said Jean-Marc
Ollagnier, group chief executive of Accenture’s Resources industry
group and co-chair of the United Nations’ Sustainable Energy for All
committee on energy efficiency. “Clean energy sources present
significant potential, especially considering the strong downward trend
in costs, while energy-efficiency related services can be a game-changer
in reducing emissions and generating new revenue streams. However, while
utilities are well-positioned to take advantage of these opportunities,
they need to make strategic choices now and shape the business model
they will adopt.”
Besides continued efforts by utilities to improve energy efficiency in
power generation, Accenture
Strategy and CDP
see the remaining value pockets being achieved through commitments to
five emerging business models:
-
Energy as-a-service provider – delivers energy services instead
of energy as a commodity.
-
Large-scale low-carbon energy generator – manages an energy
portfolio that consists of at least 90 percent low-carbon electricity;
-
Local clean-energy access provider – partners with communities
and individuals to help them access locally generated clean energy;
-
Flexibility manager – optimizes efficiency across the energy
distribution system by matching and balancing supply and demand; and
-
Carbon capture and reuse operator – reduces emissions from
carbon-intensive plants, captures carbon dioxide and redeploys it in
industrial processes or agriculture, creating value from waste.
“While utilities’ strategies and timelines will vary depending on their
current asset base, the local market and their regulatory environment,
the transformation in the industry will be very significant,” said Paul
Dickinson, executive chairman and co-founder of CDP. “The opportunities
are great, however. For example, utilities in China, Brazil and India
can introduce clean generation capacity at enormous scale to support
increasing demand and economic growth, while utilities in Africa could
leapfrog, as they did with telephony, and skip the fossil fuel era by
implementing a low-carbon energy system directly.”
About Accenture
Accenture is a leading global professional services company, providing a
broad range of services and solutions in strategy, consulting, digital,
technology and operations. Combining unmatched experience and
specialized skills across more than 40 industries and all business
functions – underpinned by the world’s largest delivery network –
Accenture works at the intersection of business and technology to help
clients improve their performance and create sustainable value for their
stakeholders. With more than 358,000 people serving clients in more than
120 countries, Accenture drives innovation to improve the way the world
works and lives.
Accenture Strategy operates at the intersection of business and
technology. We bring together our capabilities in business, technology,
operations and function strategy to help our clients envision and
execute industry-specific strategies that support enterprise wide
transformation. Our focus on issues related to digital disruption,
competitiveness, global operating models, talent and leadership help
drive both efficiencies and growth. For more information, follow
@AccentureStrat or visit www.accenture.com/strategy.
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