The buzz word of the moment in the energy business is “transition”. It provided the theme for the ONS conference and exhibition in Stavanger in Norway two weeks ago as well as the title for several recent consultancy studies. Unsurprisingly, transition is the main concept in many of the corporate strategy reviews now being undertaken by some of the leading energy producers and utilities. The meaning of the word, however, is loose and variable. It is not even clear whether some of the big operators in the market understand the breadth of the transition that is already taking place and the extent to which it could reshape the prospects for their businesses. For some the shift is very uncomfortable. The discomfort is not limited to the hydrocarbon sector or the utilities. The problems of some parts of the nuclear business, for instance, are not just the result of mismanagement or the choice of the wrong technology. Much more fundamental is the difficulty of adjusting from an environment where they were in effect monopoly suppliers to passive users to a very different world in which consumers expect their energy to come at a competitive cost. Parts of the renewable sector, dependent on policy driven subsidies, are also vulnerable when competition from new technology makes heavy support prices unnecessary. Responding to this time of transition, and to all its aspects, is now the big strategic challenge for the sector. There is no single right answer. There are several very different equally credible strategies. The real dividing line is between those who have a strategy and those who don’t. The one answer that is clearly wrong is to do nothing. It will be fascinating now to see who has the nerve to take a lead, and equally fascinating in a morbid way to watch those who are frozen in their indecision.
FT 12th Sept 2016 read more »
Jeremy Leggett: On August 10th, readers of the Conservative party’s newspaper of choice, the Telegraph, will have read the kind of headline more normally associated with Greenpeace magazine: “Holy Grail of energy policy in sight as battery technology smashes the old order.” In the article, international business editor Ambrose Evans-Pritchard presented such compelling evidence for the soaring prospects both of storage and renewable power that it must have left more than a few of his readers shaking their heads in wonder that so many of their fellow Conservatives can remain wedded to the receding prospects of new nuclear power and shale gas in the UK. “This country can achieve total self-sufficiency in power at viable cost from our own sun, wind, and waters within a generation,” Evans-Pritchard wrote. “Once we shift to electric vehicles as well, we will no longer need to import much oil either. Rejoice.”
Jeremy Leggett 12th Sept 2016 read more »