Consolidation will “revolutionise” the global energy sector, with China, Germany and the UK the top three destinations for energy companies and investors pursuing their next smart energy investment, research by law firm Pinsent Masons shows.
The Smart Energy Report gathered views from 250 senior executives at utilities, energy investment companies and institutional investors during the first half of this year. It found that 90 percent of utilities are actively seeking a smart energy technology joint venture or acquisitions with energy technology ‘bolt-ons’ to underpin their strategies.
Half of those surveyed were from Asia-Pacific, Pinsent Masons said, and the region ranked second for financial attractiveness for smart energy projects after the US. Executives said China’s light-touch regulation and generous financial incentives are supporting the drive, in addition to technological innovation, lower market entry costs and high rates of return.
“China scoring high is in some ways surprising, given its record to date on pollution. However, it shouldn’t be, as there is now tremendous societal pressure to address these environmental issues and the government has made the environment a top national agenda issue,” said John Yeap, a Hong Kong-based partner at Pinsent Masons.
“By prioritising smart energy, China can be seen domestically to be taking real action to improve the environment, while at the same time propelling China internationally to the forefront of what many believe will be a paradigm shift in energy production and consumption.”
The research also showed investors and energy companies are prioritising smart meters, new methods of harnessing surplus power and in-house development of data analytics technology within the next two years. Cloud management and virtual power plants will see a surge of investment in six years, it noted.
About 85 percent of the respondents expect M&A to increase in the next 12 months, while 62 percent of the energy companies said they would not opt for in-house development of smart energy solutions due to high start-up costs and lack of expertise.
“Energy companies are grappling with a seismic shift in energy markets and consumption patterns,” noted Ian McCarlie, energy partner.