BUSINESS MODEL INNOVATION FOR THE ENERGY TRANSFORMATION · 2020-04-17 · transformation offerings...

/ ©2019 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED1

BUSINESS MODEL INNOVATION FOR THE

ENERGY TRANSFORMATION

SEPTEMBER 24, 2019

MACKINNON LAWRENCE

DIRECTOR & GLOBAL LEAD, NAVIGANT RESEARCH

CSIS


NAVIGANT AT A GLANCE


NAVIGANT’S GLOBAL ENERGY PRACTICE

WHAT WE OFFER WHO WE WORK WITH

Program Strategy Program Build-

OutProgram

Implementation

A unique energy consulting firm, with global reach, offering full life cycle solutions to accelerate the energy transition

TRANSFORMATIONOFFERINGS

ENERGY CLOUD TRANSFORMATION

SUSTAINABILITYSOLUTIONS

CLEAN ENERGYPROGRAMS

ENERGY AND CAPITAL MARKETS

TECHNOLOGYINNOVATION

AND MANAGEMENT

ENERGY SYSTEMTRANSFORMATION


PREDICTING THE FUTUREIT’S A MATTER OF PERSPECTIVE…

UNIVERSAL TRUTHS

1) Emerging

Technology is almost

always overhyped.

2) Forecasted adoption

is usually too

conservative.

/ ©2019 NAVIGANT ALL RIGHTS RESERVED CONFIDENTIAL & PROPRIETARY5

2) Customer Demand

3) Policy & Regulatory Shifts

1) Technology Innovation

THE ENERGY TRANSFORMATION IS ACCELERATING3 FORCES OF CHANGE UPENDING 200+ YEARS OF INDUSTRIAL-SCALE ENERGY…

EMERGING (ECO)SYSTEMS

• How do I prepare my business for transformation?

• What are the parameters of transformation?

• How do I protect/grow my market share?

How do we implement our vision/strategy?

How should we allocate resources?

Where can we add value/grow?

What are the identifiable & compelling value pools?

TACTICS STRATEGY VISION TRANSFORMATION


1

2

3

ENERGY TRANSFORMATION MEGATRENDSCOMMON BUT DIFFERENTIATED CHALLENGES…

Flat or DECREASING demand

Cost to maintain EXISTING infrastructure

INTEGRATING renewables and DER

Rapidly INCREASING demand

Cost to buildout NEW infrastructure

ACCESS to renewables and DER

DEVELOPINGDEVELOPED


THE ENERGY CLOUD: POWERLINEAR DELIVERY SYSTEM GIVES WAY TO HIGHLY NETWORKED, DYNAMIC GRIDS…

Clean

Distributed

Mobile

Intelligent

/ ©2019 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED8 / ©2019 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED8

THE ENERGY CLOUD: LIQUID FUELSFUEL OPTIONS TRANSFORM INTO AN INCREASINGLY DIVERSIFIED AND COMPLEX PORTFOLIO…

H2

Past

Few fuels, tightly controlled

Emerging

Diverse fuels, diverse suppliers

CN

GE

Market Demand

TechnologyInnovation

Policy & Regulation

/ ©2019 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED9 / ©2019 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED9

THE ENERGY CLOUD: MOBILITYDIGITIZATION ENABLES MOBILITY DIVERSIFICATION…

Market Demand

TechnologyInnovation

Policy & Regulation

Emerging

Autonomous, clean, electric and shared (ACES)

Past

Single occupancy vehicles dominated

WORK

ERRANDS

HOME

LEISURE

WORK

ERRANDS

HOME

LEISURE


DUAL-TRACK INNOVATIONBALANCE INITIATIVES THAT IMPROVE EXISTING PROCESSES WITH THOSE THAT CREATE NEW GROWTH…

Source: Navigant

Track 2: Develop the Next

Business Model(s)Track 1 – Optimize

the Current Business Model

Time


CUSTOMER CENTRICITY AS A MISSIONA FRAMEWORK FOR ARCHITECTING NEXT GENERATION BUSINESS MODELS

Source: Navigant

1. Start with the customer, their needs,

and value propositions.

2. Identify solutions (products and

services) that can be ideated and

developed to meet customer needs

and deliver value.

3. Design business models that

leverage enabling technologies and

physical infrastructure.


WHAT DO CUSTOMERS WANT?CONSUMER EXPECTATIONS ARE EVOLVING IN THE ENERGY CLOUD (THE NEW FOUR C’S)…

More customers want control of their energy usage and spend, better transparency, and improved reliability and resiliency

Greater customer choice and demand for more energy options, including clean and renewable energy

Hassle free customer experience and more personalized and digital options

Customers are increasingly cost-sensitive and look for ways to optimize their total energy costs

CONTROL(Flexibility)

CHOICE (Sustainability)

CONVENIENCE (Autonomous)

COST(Individualized)

Residential Customers

Commercial and Industrial Customers

Municipal and Government Customers


Co

rpo

rate

s • “…ESG isn’t just a nice-to-have anymore. It’s something shareholders will demand, because they believe it’s going to drive everything else they care about. Growth, market share, profitability.”

‒ “Why It’s Time to Finally Worry about ESG,” HBR.org.

Cit

ies • By 2050, twice as

many people will live in cities as in rural areas

• Sustainable development encompasses all aspects of a city’s healthy development, addressing economic/financial, social, and environmental issues

Cit

izen

s • 3 out of 4 millennials accept that climate change is a fact

• 87% of millennials believe the success of a business should be measured in terms more than just its financial performance

‒ HBR

SUSTAINABILITY (AND RESILIENCY) AS MERE TABLE STAKESESG RAPIDLY BECOMING A CORE STRATEGIC BUSINESS IMPERATIVE…


The global clean energy

economy reached $1.5 trillion

in 2018.

Source: Navigant Research; AEE

EMBRACE DECARBONIZATIONNO LONGER A QUESTION OF IF, BUT WHEN…


GO SMALL TO GO BIGAGGREGATING DEMOCRATIZED EDGE ASSETS ARE THE NEW ECONOMIES OF SCALE…

$-

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

($ M

illio

ns)

(MW

)

Distributed Generation DESS EV Charging Load Demand Response Energy Efficiency DERMSRevenue

Annual Installed Total DER Power Capacity and Revenue by Technology,

North America: 2019-2028

Source: Navigant Research

DER is expected to grow 8x

faster than net new central

station generation in the next

10 years (520 GW vs. 66

GW).

New global distributed

generation (DG) deployments

will surpass new centralized

generation in 2024.



There is an estimated

>$1.3 trillion up for grabs in

new products and services

over the next decade.


TURN COMPETITORS INTO A DIFFERENTIATORSTAKEHOLDER (ECO)SYSTEMS EXPAND AS MEGA-INDUSTRIES COLLIDE…

Sources: Navigant, global figures

Disruptors are cash-heavy, with a keen focus on innovation and customer relationships.


BE IN THE CONNECTION BUSINESSNETWORK ORCHESTRATION ISN’T JUST FOR UNICORNS…

Service Providere.g., EaaS

2.5x

Asset Buildere.g., Own/operate DERs

1.5x

Technology Creatore.g., Storage solution creator

4.7x

Network Orchestrator

e.g., Smart City operator

5.8xMargins on individual

technologies are expected to

erode even faster going forward

(rooftop solar, storage…).


SEEK VALUE STREAM DIVERSIFICATION“FAST FORWARD” ENERGY COMPANIES HAVE ALREADY BEGUN…

• Concentrated demandenergy consumers are demanding more individualized and

sustainable solutions that offer more autonomy and flexibility

• Technology democratization proliferation of demand-side technologies (e.g., smart

thermostats, EVs, etc.)

• Compounding innovation combination of emerging tech leading to accelerated

disruption

• Industry couplingmore competitive stakeholder landscape leads to multi-sector

solutions

0/1

$

PLATFORM ATTRIBUTESVALUE STREAMS

energy

financial

data


LEVERAGE DISRUPTIVE INFRASTRUCTUREINFRASTRUCTURE TURNOVER COMBINED WITH DIGITIZATION IS A MULTI-TRILLION DOLLAR PLAY...

DER

Connected Buildings

E-Mobility

Smart Grid

Distributed Computing

Connectivity

Urban Digitization

INFRASTRUCTURE PATHWAYS

The world needs to invest

about 3.8% of GDP, or

$94 trillion by 2040, in

economic infrastructure just to

support expected rates of

growth.

Source: UN

FOR MORE INFORMATION,

CONTACT:

Defining the Digital Future

of Utilities

Utility’s Role in Electricity’s

Future

Energy Cloud

Playbook

Business Value through Disruptive Energy Platforms

State and Future of the Power

Industry

RELEVANT THOUGHT LEADERSHIP

Mackinnon LawrenceDirector & Global Lead, Navigant Research

+1.202.973.6508

[email protected]

mailto:[email protected]

BUSINESS MODEL INNOVATION FOR THE ENERGY TRANSFORMATION · 2020-04-17 · transformation offerings...

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Transcript of BUSINESS MODEL INNOVATION FOR THE ENERGY TRANSFORMATION · 2020-04-17 · transformation offerings...