Power & Utilities | PwC Polska (2024)

Strategy of the future

Current consumer-related strategies in the energy industry have focused on “results-based satisfaction”. It was enough to respond to basic issues in a satisfactory manner. Nowadays, customers have much higher expectations when it comes to interacting with their energy suppliers. Power companies need to remodel their current approach and create strategies determining the lengths they want to go to in developing new products and services, as well as ensure a proper system for consumer relations.

Partnership with companies outside the power industry

New business models applied by companies on the energy market require establishing cooperation with new business partners and initiating new trade relations. The digital revolution requires power companies to utilise a different strategic approach. The challenge is to decide which technologies to support, which services to offer consumers, and how to effectively move from strategy to market implementation. Players currently present on the market will have to assess whether they have the innovation, experience, and means necessary to meet future consumer needs in terms of products and services.

Investors do not like risks

Volatility and uncertainty in the energy sector change how investors perceive risk, exerting additional pressure on the balance sheets of companies supplying utilities.

As the market structure changes, both in the competitive and state-controlled sector, the decisions on funds’ allocation become more complex. Investors have a wide selection of investment choices, and the arrival of smart electrical grids, renewable technologies, and beyond-the-meter services increases the risk profile.

Customer-oriented focus

Companies in the energy sector cannot allow their importance to customers to diminish or become marginal. Therefore, they are moving from strategies focused on assets towards solutions targeting customers to a greater extent. On a market dominated by technology, power companies need to change how customers perceive them. They should become active partners and providers of services and solutions, and not only energy suppliers.

Technologies of the future in the energy sector

Signals to increase spending on innovation are coming from the entire environment surrounding power companies. They are stimulated by domestic and EU policies. It is also driven by the available funds, emerging business models and the will to increase competitive advantage. The willingness to become part of the trend of investing in start-ups is also significant.

More and more innovative solutions will be implemented in the energy industry over the next 20 years. The way new technologies are used as factors driving the transformation of the energy sector is going to influence company innovation.

Two dimensions of digitisation on the energy market

On the one hand, it allows companies to be perceived by consumers as frontrunners in new technologies. On the other, it increases their efficiency by utilising new technologies and, consequently, provides better financial results. It is a significant challenge to power companies. This industry has its own pace of change, which ranks it behind the leaders of digital maturity – the banking, media, consumer goods, and telecommunications sector.

The potential of reducing costs

Power companies want to increase their efficiency. In recent years, this process was strongly equated with employment reduction. Only between 2010 and 2014 alone, employment in the 5 major Polish power companies was reduced by approximately 14 thousand jobs, which represents an approx. 10% decrease of the total number of employees. Employment optimisation influences how a company is perceived by employees and its environment. Where then, aside from employee benefits, can the opportunity to reduce operating costs of power companies be found?

Other groups of costs

There is a large number of costs related to material and energy usage in power companies, which makes up a large percent of core operational costs. This category may bring significant savings provided that purchases are properly organised within the company. Depreciation also forms a substantial part of costs borne by power companies. It mainly results from large capital commitment in investments in fixed assets. Reducing these costs would only be possible in case of limiting the value of investments – improving the efficiency of this category is possible mainly through individual analysis of each investment process.