Energy sector has less than 5 years to transform - PwC
Less than five years are available for the energy sector to prepare for market changes generated by technological development and consumer trends, according to a global energy survey by Big Four professional services firm PwC.
The survey was conducted for the 15th time, involving 118 companies from 56 countries. According to its main findings, data-based, disruptive technological development is driving radical changes in the energy sector. The rapid pace of change poses serious challenges for companies, as they have to overcome old operational habits.
The vast majority of respondents (89%) stated that the main cause of the changes is technological development involving the sector, such as solar cells, smart metering, smart networks, and advancements in the field of electricity storage.
Some 90% of surveyed CEOs said they have up to five years globally to prepare for market transformation, based primarily on the challenges posed by distributed power generation and changing client needs. While most acknowledged the necessity of changes, about 82% said they believe their companies are not yet ready for these changes at present. A very small portion of respondents, only 15%, said they are focused on business model innovations that could be considered breakthroughs.
The digital transformation of the energy sector has also started in Hungary, which is well illustrated by the activities of many industry players, PwC notes.
"The energy and utility sectors will be based on a digital, personalized and distributed energy production model, instead of the analogue, centralized and standardized model," says Ádám Osztovits, senior partner of PwC Hungaryʼs business advisory branch. "In order to successfully manage change, the actors involved need to develop a new and clear identity that clearly defines how the company imagines its place in the changed environment. If you know where youʼre headed, itʼs easier for you to win over others to follow you," he stresses.
Survey participants indicated that customer focus is becoming more important than before, observes András Lengyel, head of energy and utilities advisory at PwC Hungary.
"The energy sector should transform into a customer and service-oriented partner from a engineering-focused utility company," observes András Lengyel, head of energy and utilities advisory at PwC Hungary. "This requires more agile business operations so that companies can adapt to the new, rapidly changing business and technology environment."
"As a public utility company with the largest customer base in Hungary, we need to understand our customers more deeply and adapt to changing customer habits and needs," concurs Gábor Hiezl, CEO of NKM Nemzeti Közművek Zrt. "From a clientʼs perspective, the public utility company does not necessarily compete with another utility or energy industry members , but often with world-wide brands and players that shape customer-side experiences and expectations," he notes.
The CEO of another energy service provider asserts that his company is managing to keep pace with innovation.
"We place great emphasis on the application and integration of new technological solutions such as smart systems or battery-based energy storage, and we actively support the acquisition of digital knowledge among our employees," says Attila Chikán, CEO of Alteo Nyrt. "At the same time, I am convinced that, in addition to the technological transformation, meeting the need for sustainable development will pose a significant challenge in the coming years."
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