Infratech

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Methodology

In H1 2017, Mergermarket surveyed 250 senior level executives drawn from 200 businesses (including both energy generation and distribution companies) with revenues over US$1bn, and 50 investment entities, including PE, investment banks, multilateral development banks and sovereign wealth funds. The respondent pool was split evenly between the EMEA and Asia-Pacific regions.

The survey included a combination of qualitative and quantitative questions, and all interviews were conducted over the telephone by appointment. Results were analysed and collated by Mergermarket and all responses are anonymised and presented in aggregate

Executive summary

Smart energy technologies – which make it possible to generate, steer, store and aggregate disparate sources of power – hold the key to making sense of an increasingly chaotic energy system.

Key players in the energy sector understand that something needs to shift. Based on our survey of 250 executives from 200 electricity generation and distribution companies and 50 investment entities, they are pushing for change. Respondents are embracing technology to build an energy system that is resilient, sustainable and profitable.

Rolling out digitally enabled smart grids with direct end-user communication dominates near-term planning and investment for electricity companies and investors alike in both EMEA and Asia-Pacific. In the long term, respondents envisage the concentration of supply and demand management in the cloud through virtual power plants, particularly in EMEA.

Energy storage technologies – such as batteries, powerto-X and vehicle-to-grid – are also expected to play a decisive role. These technologies should make energy systems more efficient, paving the way to higher levels of end-customer engagement and the prospect of new service models.

Most utilities, however, do not currently have the skills in-house to implement major technological transformations. This is why most are looking for either a joint venture (49% in Asia-Pacific versus 33% in EMEA), an acquisition (28% in Asia-Pacific versus 42% in EMEA) or both to take the next step in smart energy. For 85% of respondents, M&A in the utilities sector is expected to increase over the next 12 months.

As the pace of change accelerates, utilities and investors will be under pressure to spread their investment, often beyond their comfort zone, but how and where varies. For many, legislation and government-led energy policies will be a factor in those investment decisions, either helping or hindering the roll-out of smart energy technologies. Respondents point to the Nordics for its growth potential, but say the Germany and US lead the way in terms of implementing smart energy innovation. Ultimately, smart energy’s evolution is being shaped by these investment decisions as energy businesses and investors search for competitive advantage in an increasingly charged atmosphere of change.

Nick Ogden

Partner

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Simon Colvin

Partner, Head of Technology, Media and Telecoms

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