Energy policy is in a state of flux and the role of government in balancing the energy trilemma (security of supply, affordability of energy and decarbonisation) is evolving rapidly.
It has been important over the last 10 years to start the journey to a low carbon future but the next 10 years will be about the market, technology, data and business model changes which will transform the energy industry and deliver that low carbon future. Managing legacy investments to create new opportunities, building business models fit for the future and adapting to new investment drivers in global energy markets will drive the global energy sector.
In 2019, opportunities will exist globally in interconnection, LNG and asset management with regional opportunities (Asia, Europe and US) in building “IPP Ready platforms” and offshore wind. Local opportunities driven by market design and maturity will exist in monetizing and accessing flexibility services, creating Energy Services Companies (ESCOs), subsidy free renewables, integrated Electric Vehicle value chains and smart cities.
Therefore, whilst a wide spectrum of technologies and business models are available for participation across the energy value chain, navigating investment decisions in 2019 will involve investors needing to take risks they were not prepared to or did not need to take previously. Contracting strategies will need to evolve to offer a real alternative to subsidies for long term revenue certainty and new markets need to be created. With a likely rise in energy purchase costs over the next 7-10 years, large energy users are focused today more than ever on the levers they can pull to manage their energy cost. Large customers are becoming more sophisticated at managing energy spend, through greater active market participation or asset investment, or both. Therefore, understanding what customers want and creating business models which connect capital, projects and customers to create investable structures/contracts will be critical.