business model innovation for the energy transformation · 2020-04-17 · transformation offerings...
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/ ©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
/ ©2019 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED2
NAVIGANT AT A GLANCE
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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
/ ©2019 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED4
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
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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
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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
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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
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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.
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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
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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…
/ ©2019 NAVIGANT ALL RIGHTS RESERVED CONFIDENTIAL & PROPRIETARY14
The global clean energy
economy reached $1.5 trillion
in 2018.
Source: Navigant Research; AEE
EMBRACE DECARBONIZATIONNO LONGER A QUESTION OF IF, BUT WHEN…
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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.
Source: Navigant Research
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There is an estimated
>$1.3 trillion up for grabs in
new products and services
over the next decade.
Source: Navigant Research
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.
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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…).
/ ©2019 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED18
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
/ ©2019 NAVIGANT ALL RIGHTS RESERVED CONFIDENTIAL & PROPRIETARY19
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
mackinnon.lawrence@navigant.com
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