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By David Gore, Head of Industries at BJSS
Europe’s utilities market has never been so challenging. The introduction of the European Commission policies across the European market and national renewables targets, carbon emission reductions, ever increasing price regulations and new G20 regulatory requirements all combine to make for a challenging time.
Utilities firms have been under pressure in recent years. Focusing on market capitalization, the main five power generators in the EU have collectively lost more than 105 Bn euros since 2008. This prompted the industry to question the old utility business models. More initiatives have been visible in the Renewables energy technology and addressing environmental concerns, and evolving customer requirements are the main cause for transforming the production and consumption of electricity globally. Therefore what we have been experiencing is the restructuring of major European utilities to split fossil fuel and renewables businesses to be able to position themselves better in the market and manage their businesses better. This is also inevitable given the fact Brussels is currently debating more reforms to the EU emissions trading scheme with the focus on when, instead of if, measures will be introduced to further increase the price of carbon. Therefore this highlights a significant risk to European major utilities firms where coal currently accounts for over 65% of their emissions from power, and all have a high exposure to coal.
Most European players in this sector have invested in wind farms, hydroelectric dams and other renewable energy sources. As always technology plays a significant role. IT transformation is apparent in production areas such hydraulic fracturing and extremely responsive microgrids, and on trading floors where Big Data analytics provide accurate insights from the vast amount of data available on consumption, demand patterns and market trends.
At BJSS we are engaged with firms across commodities sector providing world class transformational consulting and access to our BJSS Big Data analytics labs.