Next in energy and utilities 2023

Reinvention enabled by technology

No matter where your company sits in the broader value chain — from the energy source straight through to powering or fueling homes, businesses and transportation — you’re likely facing a similar question. How do we balance the responsibilities of today with the aspirations of tomorrow in a way that is equitable, reliable, safe, economically viable and good for customers, stakeholders and society at large?

The answer, as many of you are demonstrating through the moves you’re making, is coming from strategic reinvention enabled by technology, exploring untapped growth opportunities and amplifying today’s momentum in new ways.

As we progress through the second half of 2023 and into 2024, an era of strategic reinvention is underway. This includes efforts to change operating models, to avoid roadblocks that may slow transformation and to take a new approach to strategic planning. In PwC’s August 2023 Pulse Survey, 60% of energy and utilities executives surveyed say they’re changing strategic planning based on current business conditions.

As you adjust planning and rethink how your business is run, you may consider focusing on these five areas that may help to drive tech-enabled reinvention and sustained success in the years ahead.

Connecting the unconnected to further enable reinvention

Your business and customer needs are evolving at an unprecedented pace. Technology integrations are becoming more complex. To move at the speed and scale needed for today, energy and utilities are looking for new ways to create end-to-end interconnections that increasingly matter. This includes connecting renewables or carbon capture technologies to your assets, creating streamlined experiences for your customers or enabling data-informed business decisions. 

Emerging tech and cloud-based solutions can serve as the connective tissue or thread that helps to 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 have realized benefits in other 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. Those who haven’t seen benefits just yet said they expect to in the future.

The takeaway: Cloud-powered companies — those that already realize measurable value from cloud — tend to take a holistic and unwavering approach to cloud, backed by C-suite collaboration. They also understand that data should be at the heart of transformation efforts.

Finding untapped growth opportunities in your customers’ unmet needs

As you lead the 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 country 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 initiatives to pursue and understanding the potential financial impacts to the installation and maintenance of equipment. And, as it turns out, traditional utilities and integrated energy companies may be well-positioned to help.

The takeaway: In today’s environment, it’s important to develop a deep understanding of your customers’ energy strategy, including plans for renewables, storage and other energy management. Consider your customers’ unique needs across each stage of a project and prepare a tailored plan to help.

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 energy companies. 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. Long-time providers, like utilities or energy companies, may be among 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 capitalize on this opportunity, evaluate what skills and capabilities you could offer as a B2B solution or energy as a service provider as well as what could be developed or acquired in other ways. Leverage your incumbent status as you reinvent offerings to position yourself as a disrupter.

Amplifying the energy transition in new ways

The industry’s strategic reinventors will not only help their customers succeed, they can further the energy transition by continuing to invest in, develop or commercialize solutions related to the energy demands of today and tomorrow. 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.

For some, acquisitions or divestitures may be part of the reinvention equation, helping companies refocus portfolios on core assets or spur investments in newer areas aligned with sustainability or other strategic business goals. In our August 2023 Pulse Survey, 46% of energy and utilities executives say they plan to undertake an acquisition or divestiture in the next 12 to 18 months, among the top planned strategic business changes.

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 environmental, sustainability and governance (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 more 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 toward tech-enabled sustainability

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 sustainability, including 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 mapping every other step between ambition and operationalization.

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