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Next in energy and utilities 2024
Incremental steps add up to industry reinvention
How do we balance the responsibilities of today and the aspirations of tomorrow? And how do we do this in a way that is affordable, equitable, reliable, and good for customers, stakeholders and society? These pressing questions remain front and center for energy and utilities companies in 2024.
Answers are coming from business model reinvention enabled by technology, strategic acquisitions, exploring untapped growth opportunities and accelerating momentum in new ways.
Companies that are undergoing transformation know it can lead to uncertainty — about which projects to undertake, what and who is needed to successfully execute them, the potential cost and return on investment, and how external stakeholders can view these initiatives’ strategic benefits.
For some companies, this translates into incremental steps — and these small steps matter as a show of progress. You may be feeling pressure to act more urgently, but we know that meaningful transformation doesn’t unfold rapidly. Some initiatives may be easier to execute and offer an immediate return. Others can be complex, occur at multiple locations and consume resources across the enterprise. It may be years before a return is realized. Organizations that truly transform their business models should be prepared for both the small wins and the challenges of those longer payback projects.
Whether you’re making big advancements or taking incremental steps toward strategic reinvention, it’s making a difference. Overall efforts — from strategic acquisitions, new customer offerings or technology investments — add up to a collective leap for the industry.
Five energy and utilities focus areas for 2024
Balancing the needs of today with the changes of tomorrow
The industry’s strategic reinventors can continue to support energy transition by investing in, developing and commercializing solutions related to the energy demands of today and tomorrow — resulting in new or expanded market opportunities. This could mean helping your largest customers with their own energy transitions, which may be a significant untapped growth opportunity. In a PwC survey, most commercial and industrial customer respondents said they want support for energy-related improvements such as on-site generation, battery storage or other complex energy efficiency initiatives.
For some, acquisitions or divestitures may be part of the reinvention equation. As you continue to either refocus portfolios on core assets or spur investments in newer areas aligned with sustainability, you should balance the need to drive returns now with longer-term strategic initiatives. Private equity firms are recognizing that oil and gas investments are generating returns that outshine the long lead time for renewables. Even firms that are raising funds for the energy transition are simultaneously exploring deals in traditional oil and gas that still meet their overall mandates. As evidenced in the recent consolidation in the upstream space, companies are also re-evaluating how their customers and suppliers' engagement in mergers and acquisitions are impacting their own businesses and growth trajectories.
Meanwhile, government incentives, such as the Inflation Reduction Act and other infrastructure funding, should continue to make cleaner energy investments more economical and attainable for the next decade.
The takeaway for leaders driving growth
Customer Transformation Officer
Look for new ways to help customers achieve their energy goals, resulting in new or expanded market opportunities. Evaluate skills and capabilities you could offer as a product or service, B2B solution or energy as a service offering.
Chief Financial Officer
Continue making strategic choices to help build, acquire and divest portfolios where appropriate and consider new business relationships. Connect the dots between available incentives and funding mechanisms with your own enterprise-wide sustainability, growth and portfolio goals.
Chief Technology Officer
Advance pilots for new technologies and look for ways to scale for widespread adoption. Don’t go at it alone. Work with technology companies, sector-specific coalitions, research institutions and others to de-risk investments and enable success.
Capture value by connecting customers, operations and assets
To move at speed and scale, energy and utilities are looking for new ways to create end-to-end interconnections. This includes connecting renewables or carbon capture technologies to your assets, creating streamlined experiences for your customers and enabling data-informed business decisions.
Emerging tech and cloud-based solutions can serve as the common thread that helps forge these connections. According to PwC’s 2023 Cloud Business Survey, cloud has already helped 48% of energy and utilities executives surveyed achieve measurable value in their efforts to connect customers, field operations, assets, back office and other stakeholders in new and more efficient ways.
Leaders can alleviate uncertainty around transformation by being transparent about realized benefits in many areas, including enabling the growth and management of distributed generation and decarbonization, enhancing the use of data for asset performance and maintenance, and growing the business through new business or services.
The takeaway for leaders improving connections
Chief Operating Officer
Streamline planning and execution from the field to back office (and things in between) by automating work processes, more efficiently allocating resources and using your data to more effectively manage assets.
Chief Marketing Officer
Create connected experiences to better serve your customers and workforce. Meet rapidly changing customer needs by delivering proactive notifications, reducing response times, providing self-service options and achieving real-time visibility into work order status.
Aim for progress — not perfection — when it comes to sustainability
You’ve likely made your net zero or carbon reduction commitments. Now, you’re working to close the gap between the ambition and the actual operationalization of these commitments. Small wins matter, because this transformation won’t happen overnight. In 2024, we see energy and utility leaders continuing to make solid progress on this front, taking a balanced and methodical approach to sustainability, including ESG and related actions. This doesn’t mean the urgency has diminished. Companies are starting to move past uncertainty and form a clearer view into the complicated roadmap forward — and the related compliance, operational and technical implications.
Leaders should know you can’t manage what you can’t measure or monitor. Therefore, the rapidly changing ESG systems for tracking and recording ESG data as well as breakthrough technologies for decarbonization will likely be important considerations in the year ahead.
The takeaway: Energy and utilities leaders who continue to ask what good looks like can make real progress in 2024, mapping the steps between ambition and operationalization. This applies to everything from embedding climate risk into corporate strategy, creating more investor and audit-ready reporting practices (particularly with the SEC climate disclosure rules joining existing regulations), and understanding implications across the supply chain.
Learn more
- From theory to action: How sustainability leaders are putting plans to work
- Case study: Baker Hughes is working toward net zero at scale
- Why energy and utilities should tackle the most complex aspects of the SEC climate rules first
- How energy, utilities and resources supply chain leaders can take sustainability strategies further
Use tech to reinvent and build trust
You want the business to remain relevant today, tomorrow and well into the future. Business model reinvention is a complex undertaking for the C-suite and rest of the company. Having the appropriate technological solutions at your disposal can provide the building blocks for driving both productivity and innovation.
But with technology can come challenges. PwC’s 2023 Emerging Technology Survey found that just 7% of companies are consistently getting value from their investments in emerging technologies and generative AI (GenAI). Tech is constantly changing and it’s often costly. It may be tempting to invest in the newest product or service without thinking through implementation, upskilling the workforce and how it can impact transformation. In many cases, it makes sense to work with a tech vendor to help reduce costs and build acumen.
Resiliency should also be part of reinvention. Energy and utilities companies should build resilient energy infrastructure networks that can withstand more than ever before, from increasingly frequent and severe weather events to cyber attacks. In PwC’s August 2023 Pulse Survey, 83% of risk leaders said more frequent, large-scale cyber attacks pose the top risk to their company.
The takeaway:
Technological innovation often comes with uncertainty and change. Your company should foster a culture that embraces change and makes it part of its DNA. That can give your company a leg up on execution and may lead to greater (and quicker) returns on your investment.
You can learn how to realize measurable value from the companies getting their tech investments right. PwC’s 2023 Emerging Technology Survey found that executives who reported getting consistent value from EmTech investments differentiated their approach in several ways:
- They go beyond single use cases and use EmTech, including GenAI, to reinvent their business across all areas measured.
- They are increasing their EmTech budgets and have more employee resources dedicated to EmTech.
- They integrate the various emerging technologies in which they invest.
- They integrate tech and business strategies.
Security should also be a main focus. PwC’s 2024 Global Digital Trust Insights survey found that companies that prioritized cybersecurity experienced fewer breaches and the attacks that do hit them aren’t as costly.
Financing the road to reinvention
There are many routes to reinvention. You may choose to acquire a peer with strategically located assets that offers exposure to new customers or has industry-leading technology. Other organizations may address reinvention in-house by upgrading existing infrastructure or constructing new assets.
Whatever route your company takes to reinvention, it’s critical to develop a strategy for identifying and obtaining tax incentives, tax credits, government funds and other financial awards that can help pay for some of these projects. For example, in October 2023 the US Department of Energy announced more than $3.5 billion in awards to expand and strengthen the electric grid system and billions more in funding is planned. The Inflation Reduction Act also contains billions of dollars of funding for clean energy and sustainability projects.
The takeaway: When it comes to transformation, the conversation can inevitably lead to a few questions such as “How much will it cost?” and “What’s the return on our investment?”
PwC has addressed how companies can increase the ROI of its sustainability strategy by leveraging technology to match projects with available funds. This is just one example of how financing opportunities can help organizations offset the expenses of what can be costly undertakings.
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