Capturing value in the transition blog series: Energy transition chess - why companies need to think strategical to win

It's anything but business-as-usual in the energy sector. While renewable and low-carbon generation technologies have been shaking up the supply side for the past two decades, demand-side low-carbon technology (e.g. electric vehicles, heat pumps and smart home systems) is having its day – soon to be decade. Along with new technologies, we're also seeing the evolution of new energy business models as the relationship with customers changes, new start-ups disrupt the space, and non-energy players moving in. The energy transition represents massive opportunities and risks to companies involved. In this series of blogs, we’ll explore where we think these opportunities and risks lie and how we’re helping companies develop their strategies to address them.

Thinking strategically

At the very core, there are two types of strategic questions that companies need an answer to:

1. How do we make the most of the opportunities while minimising risks in a changing world?
2. How do we create the future we want to see?

To answer these questions, companies need to:

• be able to explore what is happening in the changing world through scenario analysis
• understand what their competitors are up to through market landscaping
• identify key opportunities by forecasting growth of key technologies and markets
• develop go to market strategies and new business models to secure their route to market
• undertake buy, build/partner/analysis to set out their approach to implementation
• screen potential partners and acquisitions to make sure they’re working with the very best companies

For companies already pushing the energy transition to succeed, they need to be able to articulate a clear vision, set objectives and put in place the resources and strategic action plans to implement it. For companies that are fossil fuelled based, they face a starker choice: adapt or die. At the heart of developing these strategies should be a focus on understanding future customers and developing compelling propositions in partnership with other stakeholders to become the supplier of choice.

We are supporting our clients in developing their strategies to address these questions. And we’re working with companies across the energy sector: from start ups to established OEMs, energy retailers, services providers and government departments.

New markets opening up and established ones being disrupted

Being plugged in to the front line of the transition, we’re seeing three big market shifts that could annually be worth €billions by 2030:

1. The rise of Home Energy Management (HEM)
2. Low-carbon heating technologies disrupting the traditional heating markets
3. Super-charging of the EV smart charging market

We’ve identified these three key market shifts as we’re seeing a lot of investment activity and strategic development these markets as companies seek to position themselves. This includes moves by the large heating and automotive original equipment manufacturers (OEMs), traditional utilities and energy suppliers, Oil & Gas majors (particularly on EVs), but also new entrants (technology companies), and a whole ecosystem of new and interesting technology start-ups.

In this series of blogs, we’ll address each of these markets in turn, identifying where the key opportunities lie, exploring the strategic challenges and opportunities for major players, and setting out how to develop business models and strategic plans.

The rise of Home Energy Management

At LCP Delta, we believe that HEM is becoming a critical component of net zero as customers seek to decarbonise and simplify their engagement with the energy system. This represents both an opportunity and threat to established energy retailers and OEMs, which need to develop their own strategies and partnerships to make the most of this opportunity. In our next blog post of this series, we’ll look at the strategic challenges and opportunities in the HEM market.