Situation

Executives at a large electricity distribution network in Australia wanted to better understand the mega trends that could impact the business. New technologies, regulations, and environmental factors were already creating turmoil for electric utilities and energy players. With 650,000 customers and $2 billion in network assets, the company was not about to leave the future to chance. The management team retained Kearney to identify the most harmful trends and develop a long-term strategy to mitigate them.

Approach

The Kearney team conducted strategy workshops to identify the trends most likely to impact the power and energy industries by 2030. We worked in collaboration with the company’s “top 30” high performers from all levels of the business, drawing on their strategic expertise and potential to lead the business.

Workshop participants identified four mega-trends—climate change, renewables and micro-generation, network design, and regulatory risks. Using scenario planning, the team assessed the impact of each trend on the company’s capex, electricity distribution volumes, and profitability. We determined that two sectors would be hit the hardest—distributed generation and storage—forecasting a 20 percent decline in the company’s electricity distribution volumes and a 60 percent decline in profits by 2030.

Impact and advantage

Kearney delivered a long-term strategy focused on distributed generation and storage, providing sequenced “action steps” to optimize the company’s capex spend, introduce tariff reforms, and capture non-core revenue opportunities.