When it comes to these recent changes, British technology and engineering consultancy BJSS, has published a report focused on the impact of the virus on the sector. ‘UK Energy – Utilities response to Covid-19’ explains the effect that the coronavirus-impacted operating environment has had on the energy industry, and explores key areas of opportunity.
We spoke to BJSS’ business consultant and author of the report, Anna Cheong, about the latest energy changes, the various stages of company recovery, and new growth ideas.
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Yoana Cholteeva (YC): BJSS has recently published a new energy report about the effects of the pandemic on the industry, could you tell me more about its findings?
Anna Cheong (AC): The report was written a few months ago and a lot has changed since, but I would say that energy suppliers and distribution businesses are very well placed when it comes to natural disasters and unplanned situations. However, the unprecedented nature of the pandemic triggered very different effects to what you would normally see in a natural disaster so we wanted to explore those key challenges in the report
Firstly, energy plants across the country faced significant challenges adhering to social distancing rules while maintaining the supply of energy.
As each day went by, everyone was focused on what measures the UK government was putting in place and what impact that had on the ability for energy players to maintain safe hygiene and security practice for employees, while also maintaining a level of trust with customers.
Secondly, the industry was experiencing reduced energy consumption due to travel restrictions and everyone staying at home. When I initially wrote the report, I honed in on the sudden spike of different consumer behaviours, such as reduced use of transport, offices shutting down, and how this had a significant impact on the energy consumption and demand across the grid. But now it’s clear that these challenges are likely to continue.
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By GlobalDataI hate to use the word unprecedented again, but the circumstances are so abnormal – usually, there’s too much demand and not enough supply. Pre-pandemic the industry was wondering what it was going to do with all this excess energy. What might seem like a small problem then, is now a big one.
YC: How badly do you predict that the energy industry will be hit overall by the pandemic?
AC: Actually, I think the positive impacts outweigh the negatives. Living with reduced carbon emissions and pollution, consumers got a taste for a cleaner environment which forced energy suppliers to rethink their energy portfolios for the better. With a greater focus now on sustainability and renewable energy, we will see a big push for investments in this space and increased support from the government and Ofgem.
YC: The report also mentions that there are three phases energy companies will have to go through: recover, regroup, and renew. Could you tell me a bit more about that?
AC: At BJSS we took a strategic approach when looking at how the industry understood the current situation and how it was responding and maintaining the balance sheets of their operations to support recovery.
Regroup really is us talking about how companies needed to maintain safety and security levels once the initial shock of the pandemic had hit. What do you learn from all of that, and how can you emerge from it stronger?
Renew is where I see us now. The industry has started to transition and rethink how to prepare for the new normal. This includes applying key learnings to day-to-day operating models to add a layer of protection to the business in the case of another natural disaster or the rise of a second wave.
YC: Do you think there are any useful strategies to be followed while the energy industry recovers after the pandemic?
AC: I think the reality is that as you explore sustainable energy, evolving energy demand, and energy investments, they all require businesses to reflect on current operating models and how they have set up the business to support the change that’s happening. This also has to reflect digitisation and the ability to grow into adjacent industries. Because there’s been so much of a push to renewables, businesses need to ensure they have actually set up internal operating models in a way that means they can spread out into the other areas of services for energy.
YC: In the meantime, are there any new growth opportunities likely to emerge in the energy industry?
AC: Yes, industries and energy suppliers continue to emphasise on the ability to supply energy, but understand there are more opportunities to invest in other sorts of services that are related which will enable them to grow with the changing needs of consumers.
Our energy industry is working hard to try and move into these sustainable adjacent industries, because it’s now not only about supplying more energy for consumer consumption, but changing from a linear traditional model of oil and gas, to solar and wind, for example.
We’ve got batteries, we’ve got solar farms, we’ve got wind farms, all sorts of changes are happening. I think traditional energy companies are well-positioned to provide these additional services, in fact, they’re probably the ones which have the most advantage, purely because of their experience and control across the industry. The question is how fast can they change? New start-up companies have started to acknowledge this trend and will attempt to get into the market, before traditional operators.
