Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?ChangecreateshugeopportunitiesforenergyandresourcescompaniesthatactnowandcharttheirowncourseTakeactionatey.com/energyContentsPREFACEDRIVERSIMPLICATIONSWhytheenergytransitionhasHowourenergysystemreachedcriticalmomentumwillchangeHANDBRAKESOPPORTUNITIESCONTACTSWhyweneedtoaddressHowenergyandresourcesriskstoprogresscompaniescancreatevalue2Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?PREFACEPrefaceDriversImplicationsHandbrakesOpportunitiesContactsOurenergysystemhasWewantedtoopenthisreportwithapowerfulanecdotetoillustratethehugesize,scopeandtransformedbefore,butspeedoftheenergytransition.notlikethis,andnotthisfast…We’retryingtoThetruthis,wecouldn’tchoosejustonefromthemanyexamplesThebadnewsisthatwe’resimplynotmovingfastenough.rewiretheglobaleconomyofinnovationunfoldingacrosstheworld.ApipelinetopumpThetargettolimitglobalwarmingto1.5degreesCelsiustomeetanurgentgreenhydrogenmorethan5,000kilometersfromWestAfricaisunlikelytobemet.Thegoodnewsisthatprogressisenvironmentalimperative.toMoroccoandeventuallyEurope.Theworld’sbiggestcopperaccelerating.ThenewEYEnergyandResourcesTransitionmineswitchingto100%renewableenergythreeyearsaheadofAccelerationmodel,combinedwithdeepindustryknowledgeschedule.Investmentbankspouringbillionsintobatteryrecycling.andexperience,confirmsthattheenergytransitionhasreachedEvenaCaliforniancollaborationbetweenafuelcellcompanyandcriticalmomentumandisaccelerating.Ourmodelalsohighlightsacarmakerthatwillturnbiogasandsludgeintocleanelectricity,thatthisjourneytothenewenergyfuturewillnotbelinear,orhydrogenandwater.singular.Infact,webelievethattalkingofoneenergytransitiondeniesthecomplexityofthechangeahead.MultipletransitionsAcrossindustriesandgovernments,andinourownhomes,willunfoldatvaryingpacesandinmanyways.bothbigandsmallchangesaretogetherdrivingaglobalenergyrevolution.Electricvehicles(EVs)fillmoredriveways.BoardsareWebelievethattalkingofoneenergyfocusedonperformanceagainstsustainabilitymetrics.Nanogridstransitiondeniesthecomplexityofthearebringingpowertovillagesforthefirsttime.Ourenergychangeahead.Multipletransitionswillsystemhastransformedbefore,butnotlikethis,andnotthisfast.unfoldatvaryingpacesandinmanyways.Previoustransitionshavebeendrivenbynewtechnologiesandachievedthroughmarketforces.Theseplayapartinthischangetoo,aswellasachangingconsumer,butourprimaryaimthistimeisfarmoreambitious.We’retryingtorewiretheglobaleconomytomeetanurgentenvironmentalimperative.3Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?PREFACEPrefaceDriversImplicationsHandbrakesOpportunitiesContactsThesetransitionswillproceedatdifferentspeeds,dependingonOrganizationsthatcommittoTheEYEnergyandResourcesindividualmarkets’motivationsandresources,butallwillnowmovetherightchoicesnowcansecureTransitionAccelerationmodelaheadatpace.We’reenteringadecadeofdisruption,shapedbytheirownfutureandamplifyournewtechnologyandunderpinnedbygovernmentpolicy.Thebuild-collectiveimpactinacceleratingtheTheEnergyandResourcesTransitionAccelerationmodel—outofrenewablestodatehasbeenrelativelysimplecomparedjourneytoanewenergysystem.anEYproprietarytool—leveragesover50,000datapointswithwhatcomesnext.Decarbonizingalargelyhydrocarbon-toidentifythetimelinesbywhichconventionalenergyassetspoweredindustrialsectoristhefarmoredifficultchallenge—andMakingthesechangeswillinevitablycreatenewrisksforthearelikelytobepartiallyorfullyreplacedbythewidespreadourabilitytotackleitwilldeterminetheultimatesuccessoftheenergyandresourcesindustry.Butthegreatestriskcomesfromadoptionandintegrationofnewenergytechnologies.Itworld’stransitiontocleanenergy.Makingithappenwillinvolveinaction—companiesthatdon’tadaptwillseerevenuesdecrease,assesses13regionsandconsiders52generationandend-usegovernmentsfacingtoughchoices,balancingeconomicandaccesstocapitalbecomeharderandcompetitorsstealmarkettechnologies,analyzingtheimpactoffourkeyleversontheenvironmentalprioritiestosetpolicythatsendstherightsignalsshare.Webelievethatenormouscommercialopportunitiesareonfutureenergymix:tothemarketand,ultimately,allofus.Energytransitionsineveryofferforthoseorganizationsthatactnowtoplaytheirroleinthecountrywillonlysucceediftheydelivermorevaluetoindustrialshifttoacleaner,moreresilient,integratedandaffordableenergy1Technologyadvancement,consideringcurrentandconsumersandendusers—youandme—andthisrequirescleansystem.Inthisreport,weoutlineaseriesofno-regretactionsemergingtrends,speedofscalingandimpactoncostenergysolutionsthataregenuinelybetterandcheaper.thatcompaniesineachsectorcantakenowtocapturevaluefromourchangingenergysystem.Theyareastartingpoint,because2Commoditysupply,consideringforecastdemandAcceleratingchangewillhaveeightmajorimplicationsforoureveryorganizationwillneedtoconsidertheirownpathacrossandpossiblebottlenecksenergysystem,andfortheenergyandresourcescompaniesatitsmultipleenergytransitions.Noneareeasy.Butwe’reconfidentheart.Theseimplicationsindicateavolatiletransition.Technologiestheyarepossible—thisisanindustrythatknowshowtodohard3Consumerengagement,includingadoptionofwillreachtippingpointsandbeadoptedinoverlappingwaves.things.OrganizationsthatcommittotherightchoicesnowcantechnologysuchasEVsCapitalportfoliosmustshifttobothsustainlegacyassetsandsecuretheirownfutureandamplifyourcollectiveimpactinincentivizeinvestmentinthenew.Supplychainswillevolvetoacceleratingthejourneytoanewenergysystem.4Governmentpolicy,includingcurrentregulationmeetdemandfordifferentmineralsandmaterials.Forpowerandpotentialchangesandutilities,miningandmetals,andoilandgascompanies,theroadaheadwillbechallengingandoftenuncertain.ReshapingThemodel’sin-depthanalysisisdesignedtohelpoperations,cultureandcustomerrelationshipswillbecomplex,organizationsunderstandandexplorethelikelyenergyrequiringhugeinvestment,newcapabilitiesanddifferentskills.transitionscenarios.ItprovidesaplatformforstrategicThesectorswillneedtomakevarioustrade-offs,keepingenergydiscussionsaboutthedifferentenergytransitionstrategiessecurity,sustainabilityandsupplyinbalance.Andeachcompanyavailabletothemandtheresultingimplications,opportunitieswillfaceitsowndilemmas—determiningwhichchangestomakeandnoregretactionsfortheirorganizations.andwhen,amidongoinguncertaintyand,formultinationals,inconsistencyacrossdifferentmarkets.4Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?PrefaceDriversImplicationsHandbrakesOpportunitiesContactsDRIVERSWhytheenergytransitionhasreachedcriticalmomentum5Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?DRIVERSPrefaceDriversImplicationsHandbrakesOpportunitiesContacts“Doubledownandtripleup.”InSeptemberThecombinationofkeydriversmeansenergytransitionsaroundthe2023,EYjoinedtheGlobalRenewablesworldareprogressingatpaceAllianceandmorethan250otherorganizationstocallonworldleaderstoagreeIncreasing,Sustainabilityasatoatargetoftriplingrenewableelectricitycatalyzingboardroomagendacapacitytoatleast11,000gigawatts(GW)byinnovationandnew2030atCOP28.energysolutionsIt’sanambitioustarget,butonewebelieveiscriticalifweTechnologyConsumersGeopoliticsaretosecurealivablefutureforallofus.Keepingglobalwarmingtothe1.5degreestargetsetinPariswouldAdvancingandSectorChanging,becomingThebusinessCreatingnewenergyrequirea45%reductioningreenhousegasemissionsbyapproachingaseriesofconvergencemoreengagedofclimatechampionsand2030—theUNpredictstheywillinsteadriseby10%.economictippingpointswithenergyecosystemsButwhileprogresstowardanewenergysystemhasnotbeenfastenough,ithasrapidlypickedupspeedoverthepastcoupleofyears.Renewablesbuild-outandadoptionofenergytechnologieshaveoutpacedmostforecasts,butourmodel(seepage4),whichconsidersagreaterarrayoffactorsthanmostothers,revealsthatchangeisacceleratingfasterthaneventhemostoptimisticpredictions.Infact,webelievethat,aroundtheworld,changehasreachedanunstoppablemomentumduetothecombinationofseveralkeydrivers.6Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?DRIVERSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsTechnologyisadvancingRenewablepowergenerationcostsTechnologiesareadvancingandrapidlyapproachingLCOE(US$/MWh),2010–22OnshorewindOffshorewindaseriesofeconomictippingpoints—underpinningaffordablecleanenergysolutionsthatarepowerful,SolarPVUS$/MWhefficientandscalable,andhelpbolstersecurityofsupply.In2022,around86%,or187GW,ofnewlycommissioned,450491023518873utility-scalerenewablepowergenerationproducedelectricityatalowercostthantheaveragecostoffossil40041720222010202220102022fuelgeneration.Solarisnowthecheapestsourceofnew-buildelectricityinmanymarkets,evenamidrecent350inflationandpricerises.Theglobalweightedaverage300levelizedcostofelectricity(LCOE)1forsolarphotovoltaic250(PV)is29%lowerthanthecheapestfossilfuelalternative.200Large-scaleenergystorage—criticaltoanenergysystem150dominatedbyrenewables—isalsoquicklybecomingmorecost-competitiveandsophisticated.Fossilfuelcostrange:100US$50–US$150/MWh48%50TheEYsurveyof70,000global0consumersacross18marketsrevealed2010thatnearlyhalf(48%)willlikelybuyanEVastheirnextvehicle.88%66%61%Source:EYanalysisofIRENAdata.1TheLCOEistheminimumconstantpriceatwhichelectricitymustbesoldtobreakevenoverthelifetimeofaproject.7Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?DRIVERSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsSectorsareconvergingGeopoliticsaremorevolatileConflictandothergeopoliticalfactorshavealsoseensomenationsembarkonaquesttobecomeenergysuperpowers,SectorconvergenceisincreasingasdigitalizationblursGeopolitics,particularlythewarinUkraine,haveredefinedthetakingadvantageoflocationandavailabilityofnaturalboundariesbetweensectors.Whencompanies,includingimportanceofenergysecurity,triggeringarenewedfocusonresources.Forexample,theUS,Australia,SaudiArabiaandcompetitors,joinforces,theycanamplifytheircollectiverenewablesinmarketsthatimportenergy.In2022,investmentChileareattemptingtotakebackcontrolofenergysupplyknowledgeandskills,andaccelerateinnovation.Forexample,inlow-carbontechnologiessurpassedUS$1tforthefirsttime,chainsfromChina,theworld’scurrentcleantechsuperpower.theworld’sfirstoffshoresolarenergyplatform,launchedintriggeredbyturbochargedcleanenergypolicyintheworld’stheNorthSeainAugust2023,istheresultofseveraloffshorebiggesteconomies,includingUS$369bearmarkedforgreentechwindandengineeringcompaniescomingtogethertoformaundertheUSInflationReductionAct,andaUS$270bprovisionconsortium(SeaVolt)withcommongoals.fromtheEuropeanCommissionforcleantechcompanies.ConsumersarechangingIn2022,investmentinlow-carbontechnologiesConsumers’attitudesanddemographicsarechanging.GensurpassedZandmillennialsarenowthemajority.Thereisstillagapbetweenintentandaction,butsustainabilityismoreimportantUS$1ttomanypeople—theEYsurveyof70,000globalconsumersacross18marketsrevealedthatnearlyhalf(48%)willlikelyforthefirsttime.buyanEVastheirnextvehicle.IndicationssuggestthatEVswilloutstripsalesofallothervehiclesby2030.Oursurveyalsofoundthat62%ofpeoplehavebought,orarethinkingaboutbuying,solarpanels,and50%areconsideringbuying,orhavealreadybought,batterystorage.ClimateisabusinessissueSustainabilityiskeytoboardroomagendasinmanyregions,aspressureincreasesfrominvestorsandcustomers,regulationsgettougherandcapitalbeginstoflowtosustainableinvestments.Morethan3,000businessesandfinancialinstitutionsareworkingwiththeScience-BasedTargetsinitiativetoreducetheiremissionsinlinewithclimatescience.8Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?DRIVERSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsMultipleenergytransitionswillGlobalfinalenergydemandbyfueltypeandregionmoveatdifferentpacesGlobalfinalenergydemandisprojectedtoincreaseby17%by2050,as17%increaseinThepaceofchangewillcontinuetopickupoverthenextgrowthenginesChinaandSouthAsiaoffsetenergydemandstabilityintheglobalfinaldecadeandbeyond,creatingfundamentalshiftsinhowUSandEurope.energydemandtheworldproduces,consumesandtradesenergy.Ourby2050modelindicatesthatglobalrenewableenergycapacityTheglobalenergymixisprojectedtoshifttowardpower,withthesharewillriseby2,000GWbytheendofthedecade,anamountofelectricityinfinalconsumptionexpectedtogrowto24%by2030andelectricitydemandequivalenttoChinaandEurope’sentirerenewable32%by2050.Thecorrespondingdoublingofelectricityconsumption,shareoftotalfinalcapacitytoday.Butourmodelingoftheimpactoffourcombinedwithuptakeofhydrogen,isprojectedtooffsetfossilfuelenergydemandbykeylevers—technologyadvancement,commoditysupply,consumption,whichisforecasttomeet57%offinalenergydemand,2050,from22%todayconsumerengagementandgovernmentpolicy—andtheircomparedwith72%today.impacton52technologies,revealsthatthespeedandnatureofthischangewillvarywidelyacrosscountries,Globalfinalenergydemandbyfueltype(exajoule)marketsandsectors.Thereisnotoneenergytransition,butmany.+17%55032%471Ourmodelindicatesthat490515176Electricity2.2%peryeargrowthinglobalrenewableenergycapacity10616Hydrogenelectricitydemandwillriseby2411614045Bioenergybetweennowand20508426672Naturalgas2,000GWbytheendofthedecade,anamount72873180Coal7581OilequivalenttoChinaandEurope’s18579161entirerenewablecapacitytoday.1852023177205020302040Source:EYanalysisofERTAmodeldata.9Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?DRIVERSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsThespeedoftransitionwillvarybasedonmultipleTechnologyadoptionratesfactors,includingthemotivesforchange.Aroundtheworld,governmentsfacedifferent,sometimescompeting,Thetransformationtoanewenergysystemwillvaryacrossregions.priorities—economicprosperity,geopoliticalpressures,environmentalgoalsandtheneedtoprovidesecurePowergeneration(TWh)accesstoaffordableenergy.Thesemotiveswilldrivedifferentpolicydecisionsthatwilldetermineprogress.USEuropeChinaSouthAsiaRestoftheworldGlobalEverymarketwillneedtoactivatearangeofacceleratorstoovercometheinertiaofthestatusquo,keepuptheSolar2050momentumofchangeandmeetclimatetargets.2025EverymarketwillneedtoactivateWind2050arangeofacceleratorstoovercome2025theinertiaofthestatusquo,keepupthemomentumofchangeand2050meetclimatetargets.NuclearTheseshouldincludeeverythingfromcarbonpricing2025toinvestmentintechnology,fasterconnectionsofnewcapacity,embeddingintelligenceintoadigital,Coal2050bidirectionalgridandstrengtheningsupplyofcritical2025minerals.Theseacceleratorsshouldsendtherightsignals—toinvestors,theindustryandconsumers—tospeed2050uptheshiftawayfromtraditionalgenerationandtowardGasrenewables.Iftheydon’tdothisfastenough,marketswillneedtoconsiderotheroptions,includinglarge-scale2025carboncapture,usageandstorage(CCUS)andevenexpandednuclearprograms.0%25%50%75%100%0%25%50%75%100%0%25%50%75%100%0%25%50%75%100%0%25%50%75%100%0%25%50%75%100%10Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?Source:EYanalysisofERTAmodeldata.DRIVERSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsThecomplexityofchangewillrequiretoughtrade-offsandhugeinvestmentForenergyandresourcescompanies,multipletransitionswillhelpmobilizegovernments,reshapeandachieveconsensusontechnologiesandenablingenergyinfrastructurewillbeneededmakeforavolatilelandscape.Differentmarketswillrequireregulation,shiftconsumerandcorporatebehavior,andmakesureby2050(that’saquadruplingofcurrentlevels).differentstrategies,createdifferentrisksandpresentdifferentouremergingnewenergysystemisalsoafairandequitableone.trade-offs—allatdifferenttimes.Andforenergyandresourcescompanies,makingsmart,no-Weknowthiswillbechallenging,butwealsobelievethatevidenceregretactionsnowcanmitigateriskandcapturethevalueofBesidesthehugecostandcomplexityoftransitioninglegacyofacceleratingchangeisreasonforoptimism.Thisisacriticalchange.Thiswon’tbeeasy,particularlyaseverycompanywillassets,ourmodelindicatesthetaskathandismorechallenging,decade.Therightdecisionsmadenowcanspeedupourtransitionbeontheirownpath,facingrisksuniquetotheirownmarketandmultifaceted,thanmanyanticipated.Energyandresourcestothenewenergysystemandbendtheemissionscurveinandgeography.Butthosethatcanidentifyandcommittothecompanieswilltakeonthechallengewhilealsoplanningforourfavor.Forgovernmentandregulators,thismeansdecidingrightstrategicchoicesnowcanrealizesignificantcommercialdownstreamdisruptionandkeepinginvestorsonside.howtoconvertobjectivesintotheeconomicsignalsthatnudgeopportunitiesand,collectively,hastenourjourneytoaconsumersandmarketsintherightdirectionattherighttime.Ansustainable,resilientenergyfuture.Forthepowerandutilitiessector,challengesincludeaneedestimatedUS$4.1tofannualinvestmentinlow-carbontransitiontosignificantlyexpandandupgradethegrid,andalsoresetrelationshipswithcustomers.MinersmustfindmoreaccessAnestimatedtocapitalandsecurelicensetooperate(LTO)iftheyaretobuildsupplychainsthatkeepupwithevolvingdemand—noUS$4.1tenergytransitioncantakeplacewithoutmining.Foroilandgascompanies,decarbonizingthemoleculesthatmuchoftheofannualinvestmentinlow-carbonworld’sindustrywillcontinuetorelyonwillbecomeapriority—transitiontechnologiesandenablingenergyandcriticaltotheultimatesuccessofclimateambitions.infrastructurewillbeneededby2050(aquadruplingofcurrentlevels).Multinationalswillnavigatethecomplexityofoperatingacrossdifferentenvironments,takingcarethatactionsinoneregiondon’tnegativelyimpactoperationsinothers(especiallyaroundthesocialagenda).Everysectorwillneednewtalentandtechnologytomakechangehappen.And,critically,theywillneedtocollaborateacrossmultiplesectors,workingtogetherto11Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?PrefaceDriversImplicationsHandbrakesOpportunitiesContactsIMPLICATIONSHowourenergysystemwillchange12Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?IMPLICATIONSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsAstheenergytransitionaccelerates,theTheeightimplicationsoftheenergytransitionpaceofchangewillhavemajorimplicationsforourenergysystemandforenergyandChangestoourenergysystemhavereachedcriticalmomentum,drivenbytechnologyadvancement,commoditysupply,resourcecompanies.Wediscusstheseconsumerengagementandgovernmentpolicy.implicationsseparatelybut,inreality,theyareinterconnected,drivingandimpactingImplication1Implication2Implication3Implication4eachother.Renewablesdominateenergy(Almost)everythingisOilandgasgogreenEnergysystemsarelocalizedRisingelectrificationwillacceleratetheevolutionofthegenerationelectrifiedmolecule.MainstreamadoptionofEVswillshiftsupply63%62%chains.Localizedenergywillreconfigurethegrid.20382xConsideringthecumulativeimpactoftheseimplicationsofthecrudeoildemandofpowerwillcomefromcanhelpcompaniesassesstheirimpact—andidentifyWhenrenewableswillreplaceGlobalelectricitydropbeyond2030willlocalrenewablesourcesemergingrisks.Everyenergyandresourcescompanyfossilfuelsandbecomedemandriseby2050.befromtransport.by2050.willneedtoreassessinvestmentdecisionsinlinewiththedominantpowerdifferentrisk-returnprofiles.generationsource.13Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?Implication5Implication6Implication7Implication8TheurgentquesttobuildaConsumerstaketheleadSupplychainsareIntegrationofoldandhyper-intelligent,flexiblegridredefinednewenergysystems89%10x910%300%ofglobalconsumerssurveyedmoregridflexibilityrequiredacross18marketsareincreaseindemandincreasedannualinvestmentinEuropeby2050.interestedinrenewablesandforlithiumby2050inlow-carbontechnologiesself-generationtoreducefrom2022levels.requiredto2050.Source:EYanalysisofERTAmodeldata.relianceonfossilfuels.IMPLICATIONSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsImplication12345678RenewablesdominateenergygenerationChangeinthepowersectorwillbeswiftbutButinEurope,thecleanenergystorywillcenteraroundwind.Wenotlinear.Bymid-century,theglobalpoweranticipatethatamixofoffshoreandonshorewindwillbecomethemarketwillbedoublethesizeitistoday,drivenregion’sleadingsourceofpowergenerationbyasearlyas2027.byelectrificationofindustrialandend-useIntheUK,windpowercapacityhadalreadysurpassedgaspowerapplications.It’seasytoseehowproliferatingwindcapacitybyJune2023.andsolarwillcometodominate,butourmodelingsuggeststhiswillhappenfasterthanpreviousThepositiveimpactofacceleratedrenewablesbuild-outisindications.huge—helpingreducecarbonemissions,enhanceenergysecurityandcreateeconomicopportunities.However,theywillWeforecastrenewablegeneration,mainlywindandsolar,willalsoposechallenges,particularlyaroundtheneedtointegratebecomethenewbaseload—accountingfor38%ofthepowerrenewablesintothegrid,fundinfrastructureupgradesandmixby2030and62%by2050.Globally,renewableswillensureregulationkeepsupwithchange.Overcomingthesewillbecomethedominantpowergenerationby2038.requireacollaborativeeffortacrossthepublicandprivatesector,bringingtogetherpolicy,investments,innovativepartnershipsandAglobalsolarboomwillpowermorethanhalfofthis,buttechnologicaladvancements.adoptionwillvaryacrossmarkets.Solar-generatedpowerwillbecomethebiggestsourceofenergyincountriessuchastheUS,andthoseinOceaniaandSouthAsia,drivenbytechnologiesaroundsolarPVmodulesadvancingatrapidpace.ThepriceofcrystallinesiliconPVmoduleshasreducedbymorethan80%since2010.14Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?IMPLICATIONSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsImplication12345678RenewablesdominateenergygenerationShareofnonrenewablesandrenewablesinChangeinglobalelectricitygenerationmix(TWh),2022–50globalpowergeneration50,00062%Weforecastrenewableswillbecomethenewbaseload—45,000accountingfor38%ofthepowermixby2030and62%TWh40,00030%38%by2050.Fossilfuelgenerationwillpeakbeforetheend35,000ofthedecade.30,00083%25,0005xGlobalrenewableinstalled20,000oftheelectricity15,000capacityisexpectedtogrow10,00070%62%generationbeyond203038%nearly5xby2050,toaccountfor77%oftotalglobalinstalled5,000willbefromsolarandwindcapacityversus41%currently.020222030CoalGasSolarWindHydroNuclearOthers2050RenewablesNonrenewablesCoalGasSolarWindHydroNuclearOthersshareshareOthers:biomass,combustionturbine,hydrogenturbineandCCUS.Source:EYanalysisofERTAmodeldata.15Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?IMPLICATIONSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsImplication12345678RenewablesdominateenergygenerationGlobally,renewableswillbecomethedominantpowerShareofnonrenewablesandrenewablesinglobalpowergeneration(%),2000–50generationby2038.China,EuropeandtheUSwilldrivea53%increaseinsolarandwindgeneration,producingover57%ofglobalsolarandwindoutputby2050.90%Accelerators80%Mass•Carbonprice70%acceleration•Technologybreakthroughs•Fasterconnections60%•Digitalgrid•AvailabilityofresourcesMarketshare%50%40%Risks30%•Accesstocapital•Regulatoryuncertainty57%ofthetotalsolarandwind20%•Insufficientreturns•SupplychaingenerationwillbefromUS,10%•ConsumerconfidenceEuropeandChinaby2050,meaningsupplywillbecome0%morelocal.20002005201020152020202520302035204020452050RenewablesNonrenewablesNote:Fossilfuelsincludecoal,gasandotherfossilfuels.Source:EYanalysisofERTAmodeldata,datafromIRENARenewableEnergyCapacityStatistics2023,EmberElectricityDataExplorer2023.16Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?IMPLICATIONSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsImplication12345678(Almost)everythingiselectrifiedThebuild-outinrenewablegenerationwillpavetheButelectrificationofindustriesmaybethebiggestdriverofwayforrapidelectrificationofend-useapplications.change.Today,industryisthebiggestenergy-consumingsector,Ourmodelingsuggestsfinalelectricitydemandwillaccountingforaround37%offinalenergydemand.Ofthat,doubleby2050fromcurrentfigures.electricitydemandisrelativelymodest—about22%—mostofwhichisusedinmechanicalprocesses.OurmodelforecastsEconomicgrowth,particularlyinChinaandIndia,willfuelindustrialelectricitydemandtogrow159%by2050,asmuchoftheincreaseinglobalconsumption.Insomemarkets,technologiessuchaselectricheatpumpsforlow-andmedium-peoplewillaccesselectricityforthefirsttime.Inothers,rapidtemperatureapplications,andelectricfurnacesforhigh-proliferationofconsumertechnologieswillpushupdemandastemperatureuses,areadopted.Capturingthevalueofsurgingtheybecomemainstream.industrialdemandisn’tagivenforpowerandutilitiescompanies,whichwillneedtocontendwithcompetitionfromindependentpowerproducersandagrowingtrendtowardself-generation.Oilandgascompanieswillfacedualimpacts—decliningdemandfromsomesectorsandincreasingpressuretodecarbonizethemoleculesthatwillremainintegraltoothers.17Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?IMPLICATIONSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsImplication12345678(Almost)everythingiselectrifiedElectricitydemandgrowthbyend-usetechnologies(TWh)Powerdemandwilldoubleby205060,000+52%50,000Finalelectricitydemandwillincreasenearlytwofoldby2050,drivenbyelectrificationofindustrialandend-TWh40,000+14%7%useconsumerapplications,withdemandgrowthsetto30,00028%acceleratepost-2030.10%20,00055%Industrialelectricitydemandwillincreaseto36%oftotal53%energydemand,drivenbytechnologyinnovationthatoftheadditionalelectricityenablesthedecarbonizationofpreviouslyhard-to-abatedemandbeyond2030will2050industries.Inresidentialbuildings,increasinglivingbefromindustrialstandardsareprojectedtopushupdemandforelectricappliancesandspacecoolingorheating.Andtransportisprojectedtoseeoneofthefastesttransitionstoelectricity,withEVsreachingcostparitywithinternalcombustionvehiclesbythemid-2020s.10,000020222030IndustrialCommercialResidentialRoadtransportOthertransportIndustrialCommercialResidentialRoadtransportOthertransportSource:EYanalysisofERTAmodeldata.18Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?IMPLICATIONSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsImplication12345678(Almost)everythingiselectrifiedSteeldemandissoaring.Couldhydrogenturnitgreen?Traditionalmeansofproducingsteelarecarbon-intensive,accountingforabout7%ofglobalcarbonemissions.Withdemandforsteelsettoincreaseby30%by2050,effortstogreenitsproductionaregrowing.Hydrogenmayofferthemostpotentialtoreduceemissions.Replacingcoalorgaswithgreenhydrogen,basedonthecarbonintensityofglobalgridpower,indirectreducedironorelectricarcfurnaces(EAF)couldcutgreenhousegasesproducedbyasmuchas20%to40%.Thecostofproductionishigher,butproducerscanchargeapremiumtoconsumerskeenformoresustainableoptions.Severalsteelmakersaretakingadvantageofthisdemand—ArcelorMittalisusinghydrogeninitsEAFsteelmakingoperations,whereitreducesironoxideinscrapmetalfeedstock.Thecompanyisalsoinvesting,withpartnersincludingBHP,incarboncapturestorage(CCS)technologythatcouldhelpdecarbonizelegacyblastfurnaces.It’saparticularlydifficultchallengeduetothedifferinglevelsofcontaminantsinthegas,butArcelorMittalhopesitstrialsacrossitsBelgianandNorthAmericanplantscouldpavethewaytorolloutCCSacrosstheworld’ssteelplants.19Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?IMPLICATIONSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsImplication12345678OilandgasgogreenEvenaselectrificationincreases,hydrocarbonswillremainpartoftheenergymixforlongerthananticipated.Demandforgaswillstaystrong,partlybecauseofitsroleasaninterimfuel,butalsobecauseitpowerssomuchexistinginfrastructureandisusedasafeedstockinindustrialapplications.Transitioningfromoldtonewassetswilltaketime,andtheimpactofchangewilldifferacrossthesectorandglobalbusinesses.Upstreamoilandliquefiednaturalgas(LNG)businesseswillbedrivenbyglobaltrendsthatarelessvolatileandsomewhatinsulatedfromlocalpolicies.Downstreamandmidstreamoilandgasassets,highlyexposedtolocalmarketdynamicssuchasEVadoption,willhavetoadaptmuchmorequickly.20Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?IMPLICATIONSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsImplication12345678OilandgasgogreenGlobalcrudeoildemand(mmbpd),2022–50Thechangingdynamicsofoilandgasdemand120Dynamicsofmoleculetogreenmoleculetoelectron100competitionwillplayoutatagloballevelforupstream,andatlocallevelsformidstreamanddownstream.Some80crudeoilcurrentendmarketsareeasilyelectrifiedwithcurrentstatetechnologies.Somemarkets,moredifficultmmbpd6063%toelectrifyorboundtomolecules,willbesubjecttocompetitionfromnon-carbonmoleculesorhydrocarbonsofthedemanddropwithabatement.beyond2030willbeWeseeasignificantmarketforoilandgasoverthenext25years,evenwithenergytransitionsacceleratingin40fromtransportmultiplegeographies.A15%reductioninglobalcrudedemandisestimatedby2050,duetotheslowattritionof20existingenergyuseassets.Aviationandpetrochemicalsdemandwillincrease,buttheelectrificationofroad02030AviationPetrochemicalsTransportResidentialPowerIndustrial2050transportwillbebehindalargedecliningdemand.Today,2022thetransportsectorusesaround45millionbarrelsofoileveryday,ofwhichaboutone-thirdisconsumedinthecommercialsector.Butfrom2030,electrificationoftransportationwillbebehind63%ofthedemanddropforglobalcrudeoil.Note:Transportincludesrail,water,cargoandpassengertransportdata,commercialiscombinedwithresidentialdemand.Source:EYanalysisofERTAmodeldata.21Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?IMPLICATIONSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsImplication12345678OilandgasgogreenGlobalnaturalgasdemand(bcm),2022–50Gasdemandwillstabilizethisdecade,withdeclinesettobcm4,500Closeto80%acceleratepast2030.Thepaceofdeclinewilldependon4,000attritionofexistingenergyusesandcompetitionfromnew3,500ofthedemanddropones.Morethan80%ofthedemanddropbeyond20303,000beyond2030willbefromwillbefromresidentialandconventionalpowersegments.2,500residentialandconventionalDemandfornaturalgasinconventionalpowerandheating2,000powersegmentsapplicationswilldeclinefast,butotherenduseswill1,500grow,withgreenandalternativemoleculespreferredto1,000electrons.CCUSwillenablegrowthindecarbonizedpowerandbluehydrogenandammoniaproduction.5000Withmolecularenergyaroundforlonger,itwillbeessentialtodecarbonizeit.Getreadyforaraceto“greenthemolecule,”throughamixofCCUS,syntheticandbio-hydrocarbons,andalternativemoleculessuchashydrogenandammonia.Urgencywillcatalyzeinnovation,withtechnology,includingCCUS,maturingandscalingatpace.Weforecastthatconsumerdemandandregulatorysupportshouldseereturnsforgreenmoleculesoutpacegraybytheearly2040s.20222030PetrochemicalsPowerw/CCUSResidentialPowerIndustrialCommercial2050Note:Industrialsegmentincludeswaterandothertransportdata.Source:EYanalysisofERTAmodeldata.22Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?IMPLICATIONSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsImplication12345678OilandgasgogreenOilandgasportfolioevolution(illustrative)WeanticipatereturnsfromconventionaloilandgasFutureenergymajorsreturnsoperationstodeclineafter2030,ascarboncostsincreaseandelectrificationinsomesectorsreduces14%12%10%demand.6Intheshortterm,oilandgascompanieswilladaptbyimprovingoperationalefficiencyandfocusingonshorter-Importancetoenergytransition5cycleassets.Butsuccessoverthelongertermwillrequirecompaniestorethinkportfoliostrategies,movingaway4fromapurefocusonoilandgastoamixofconventionalanddecarbonizedoilandgasmolecules,synthetic3andbio-basedfuels,renewablepower,andalternativeenergycarrierssuchashydrogenandammonia.Returns2forgreenmoleculeswillbegintoriseastechnologiesmatureandcommercializationscales,leadingtoa1SyntheticfuelsNaturalwithCCUSoffsetssignificantexpansionofmarketopportunitiesforoilandHydrogenandammoniaNaturalgasgascompanies.ThesecompaniesareparticularlywellBiofuelsandbiogasCrudeoilwithCCUSoffsetspositionedtodevelopanddeployCCUStechnologies,RenewablepowerCrudeoilbothtodecarbonizetheirownconventionalmoleculesthroughoffsetsandtosupportdecarbonizationofotherhard-to-abateindustries.02030204020502022Source:EYanalysisofERTAmodeldataandO&Gmajorsstrategies.23Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?IMPLICATIONSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsImplication12345678OilandgasgogreenHowtheNetherlandsisburyingitscarbonTheNetherlandswillreduceitscarbonemissionsbyburyingsomeofthemundertheNorthSea.Inearly2024,productionissettobeginonPorthos,amassivecarboncaptureandstorageprojectthatwillseeCO2producedinrefineriesandchemicalplantsownedbyShell,ExxonMobil,AirLiquideandAirProductstransportedthroughtheRotterdamporttoemptygasfieldsundertheNorthSea.Onceoperationalin2026,theprojectisforecasttoreducetheNetherlands’carbonemissionsby2%annuallyfor15years,aswellas10%ofthePortofRotterdam’soverallemissions.It’sanambitiousplan—settobeEurope’sbiggestevercarboncaptureproject—but,insomeways,deeplypractical.Porthosismakingfreshuseofoldoilandgasfieldsandleveragingexpertisehonedintheproductionofhydrocarbonstopioneernewdecarbonizationsolutions.Italsohighlightstheadvantageofanopenaccessapproach.Multiplecompaniesacrossindustriesaresharingknowledgeandcoststoensurebestpracticeisappliedandreduceoverallcost.Innovationhereislikelytobedeployedinothercountriesexploringunderseacarboncapture.TheUKhasalreadygrantedlicensestomultipleoilcompanies,anticipatingthat10%oftheUK’scarbonemissionscouldbeburiedundertheNorthSeaby2030.24Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?IMPLICATIONSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsImplication12345678OilandgasgogreenCouldChileturnitswindintosyntheticfuel—andeconomicadvantage?AmidthewindsweptscrublandsofChile’sPatagonia,acollaborationofenergycompanies,miners,engineeringfirmsandcarmakersarepilotingaprojectthatcouldsignificantlyadvancetheworld’sjourneytocarbon-freefuels.Here,inacomplexcalledHaruOni,a3.4-megawatt(MW)windturbineispumpingoutelectricitythatisusedtoproducehydrogen,whichisthencombinedwithCO2capturefromtheairtoformasyngas.Thissyngasisusedtomakegreenmethanol,whichistransformedintoasyntheticcarbon-neutralgasoline,orpetrol.Thisfuelissettobeusedininternalcombustionengine(ICE)vehicles,withouttheneedforanyenginemodifications—Porscheisalreadyusingitinracecars.ItcouldhelpreduceemissionsfromtransportfasterthanEVadoptionalone.Makenomistake—thesyntheticfuelproducedatHaruOniiscurrentlyabout100timesmoreexpensivethantraditionalgasolineand,evenwhenpricescomedown,isstilllikelytobeafarmoreexpensivewaytopowercarsthanbatteriesorhydrogen.Itwillprobablyfinditsmarketamongclassiccarlovers.Butitsproductionisanexcitingstepforwardinthedevelopmentofsyntheticfuelsthatwillbecriticaltopowerthoseindustrieswhereelectrificationisn’tanoption,suchasaviationandtransoceanicshipping.Theprojectisalsopioneeringsolutionstostoreandtransportrenewableenergy,whichcouldspeedupdecarbonizationoftheworld’sheavyindustry.ThiscouldalsobeasignificanteconomicopportunityforChile,withthegovernmentforecastingthatthecountry’shydrogenexportindustrycouldbeworthUS$24bby2050.Coulditbeasignofhowglobaleconomicpowermayshiftasrenewablesaccelerate?Ifmorecountriesintheglobalsouth,includingMexico,IndiaandsomeAfricancountries,leverageabundantwindandsolar,theycouldacceleratetheirowneconomicdevelopment,aswellastheworld’stransitiontocleanerpower.25Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?IMPLICATIONSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsImplication12345678EnergysystemsarelocalizedAlocalizedenergysystemwillbringnewgridchallenges,particularlyasdistributedenergyresources(DERs),EVsandTheelectrificationofindustrial,residentialandtransportheatpumpsscaleatspeed.Cleversolutionstoflattenlocalsectorswillbeakeydriverofamorelocalizedenergypeaks—flexibilitytechnologies,interconnectionsandenergysystem.Asrenewablesandcleanenergyinfrastructuresharingplatforms—canmanageintermittencyandminimizearebuiltoutatscale,energywillbecomelocalizedfornetworklosses.allconsumersegments—residential,commercialandindustry.Regionswithplentiful,cheapenergysources,particularlysolarandwind,willattractnewgenerationassets,anddemandwillfollow,whereitmakessense.Inregionswherelocalizedenergysupplyisn’tpossible,we’llseemoreprojectstosupplygreenelectronsbytransmissionconnectionorinterconnection,suchastheambitiousproposedprojecttoimportMoroccancleanenergytotheUK,ortransportdecarbonizedgreenmoleculesviapipeorship.Thecolocationofsupplyanddemandwillcreateecosystemsofindustries,withnewjobs,economicopportunitiesandcheaperpowerforcommunities.Wealreadyseetheemergenceoflocalizedhydrogenhubsthattakeadvantageofgreenenergy.Overcominginfrastructurechallenges(hydrogenisexpensivetostoreandtransport)couldexpandopportunitiesbeyondcurrentindustrialclustersandlocalizedofftakers.26Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?IMPLICATIONSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsImplication12345678EnergysystemsarelocalizedHowAntwerphasbecomeEurope’scleanhydrogenhubBelgiumisasmallcountry,withnotmuchspace,sun,windorcoastline.Butit’sfastbecomingEurope’scleanimportandtransithydrogenhub,throughanambitiousstrategythattakesadvantageofAntwerp’spositionasoneoftheworld’sbusiestportsanditsproximitytovarioussignificantindustrialclusters.ThePortofAntwerp-Brugeshasformedahydrogenimportcoalitionthatincludesamixofmajorindustrialplayersandpublicstakeholders:DEME,ENGIE,EXMAR,FluxysandWaterstofNet.Together,theyhavebuiltasharedindustrialhydrogenecosystem—aone-stopshopfortheimportation,productionandthroughputofgreenhydrogenandhydrogencarriers(forexample,ammoniaandmethanol)throughoutthecountryandbeyond.ThecurrentcapacityofthePortofAntwerp-Brugeswillbeexpandedfrom2026onward,toreceivethefirstgreenhydrogenmolecules.TheBelgiumgovernmentisalsofundinganetworkofhydrogenpipelinesthatwillconnecttheporttoBelgianindustrialareasandGermanyby2028.Antwerp’shydrogenhubisabigstepforwardinmeetingBelgium’senergytransitiongoals,butit’sdeliveringhugeeconomicbenefitstoo.Belgiumhasmadeitselfamagnetforinnovation—attractingtheworld’smostinnovativecompanies,leadingresearchersandbuildinginfrastructurethatwillsetthecountryupforasustainablefuture.27Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?IMPLICATIONSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsImplication12345678Theurgentquesttobuildahyper-intelligent,flexiblegridThewidespreadadoptionofsolar,wind,hydrogenUnlesssolutionsarefoundtoshortentheinterconnectionqueuesanddistributedgenerationwilldrivefundamentalholdingupnewcapacity,muchoftheinvestmentingridflexibilityenergysystemtransformation.willfailtorealizeitspotential.We’llneedtorapidlyspeedupconnectionofrenewablesorriskoutagesastraditionalgenerationThegridwillcomeunderextremepressure,demandingurgentretires.Regulatorychangesandspeedierpermittingprocessessolutionstobothexpandthenetworkandembedflexibilitywon’tbeenoughtoclearthebottlenecks—robustsupplyofcapabilitiesthatenableabalanced,reliablesystem.materialsandminerals,andahealthypipelineoftalentwithdigitalskills,willalsoberequiredtobuildthegridofthefuture.Theimpactstothegridwillhitdifferentmarketsatdifferenttimes.InEurope,flexibilityrequirementswillincrease10timesby2050,accordingtoourforecasts.Thiswillamountto26%ofthetotalregionalelectricitydemand.Orchestratingflexibilitysolutionswithinamorelocalizedenergysystemwithmillionsof“invisible”connectionswillrequireanapproachthatincludesdiverseoptions.Technologies,bothmatureandemerging,willbekey,includingbatteriesandlongerdurationstorage.Buttheywon’tsolvetheproblembythemselves.Strategiesthatinvolveconsumersasactivegridparticipants,supportedbynewtariffs,willbecriticalleverstomanageintermittency,particularlyasadoptionofconsumertechnologies,suchasEVs,picksup.Collaborationacrosstheconsumerecosystemtoenhancetheenergyexperienceandintroducenewservicescannotonlyhelpcapturethevalueofgridinvestmentbutalsodrivebehavioralchanges.28Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?IMPLICATIONSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsImplication12345678Theurgentquesttobuildahyper-intelligent,flexiblegridSupplyadequacychallengeswillhitSystemadequacy—lossofloadexpectations(LOLE)comparisonwithinadecadeExpectedLOLEfor2025,inhours/yearTherapidgrowthofrenewablesandDERswilldrivehighlevelsofnetworkintermittencyandbidirectionalflowthatIreland24.3thegridwasnotbuilttowithstand.Germany10.5=FallingreservecapacityAsdispatchablecapacitygetsreplacedbyintermittentBelgium6.5renewables,systemadequacychallengesareexpectedtoLossofloadmorethanimpactmajorregionswithinthecomingdecade.reliabilitystandardUS6Reducedplantavailability10xInEurope,flexibilityrequirementsFrance5.7HighincidentsofforcedUK5.1outageswillincrease10timesby2050,LOLEstandardsbycountryaccordingtoourforecasts.Source:EYanalysisofENTSO-Ereports,EIA.LOLE:thenumberofhoursinaperiod(typicallyayear)duringwhichtheavailablegenerationplantwillbeinadequatetomeettheinstantaneousdemand.29Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?IMPLICATIONSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsImplication12345678Theurgentquesttobuildahyper-intelligent,flexiblegridTheinterconnectionqueuethatisholdingupnewcapacityAsthetransitionprogresses,theriskofreliabilitychallengesincreasesastheretirementofoldassetsanddemandgrowthpotentiallyoutpacethebuild-outofnewgeneration.Thiscouldseetheworldfaceahugecapacityshortfall—makingourenergysupplylessreliableandshakingconfidenceintheenergytransition.Supplychainproblemsandpermittingdelaysareslowingdownconstructionandinstallationofnewassets.Aroundtheworld,renewableenergyinfrastructuredevelopersarebeingtoldtheymustwaitanywherefrombetweenacoupleofyears(intheUS)toupto15years(intheUK)beforetheycanplugintothegrid.Theproblemisknownasthe“interconnectionqueue,”anditcouldbeamajorbottleneckintheenergytransition.IntheUS,atleast1,350GWofwindandsolarcapacityand680GWofstorageiswaitingtobeconnected—enoughtodoublethecountry’selectricitysupply.IntheUK,aboutone-quarterofconnectionapplicationsapprovedin2022havebeenofferedconnectiondatesof2030orbeyond,accordingtoregulatorOfgem.SimilarproblemsareseeninSpainandItaly.30Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?IMPLICATIONSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsImplication12345678ConsumerstaketheleadIndustrialcustomerswantmoresophisticated,personalizedoptions,suchasrewardsforshiftingdemand.ResidentialConsumers—bothindustrialandresidential—willconsumersinmanymarketsaremoreengaged,keentotaketaketheleadintheshifttoanewenergysystem,controloftheirenergyexperience.TheproliferationofEVs,ultimatelydeterminingitssuccess.Therealityisthatrooftopsolar,batteriesandsmarthometechmeansconsumerswecannotexpectpeopleorbusinesstochangetheirproduce,store,andbuyandsellenergyindifferentplacesacrossbehaviorbecauseofsustainabilitymotivationsalone.theirdailylives.Theyinteractwithmanydifferentprovidersanddemandpersonalized,convenientenergyoptionsthatalignCleanenergysolutionsmustbeeasy,cheaperandgenuinelywiththeirvalues,accordingtoanEYsurveyofaround70,000bettertodrivetheswitch.Energycompaniesthatcangiveresidentialconsumersacross18markets.Eighty-ninepercentareconsumerswhattheywantcanalsocapturetheinherentvalueinterestedinrenewablesandself-generationtoreducerelianceontheyoffer,whichwillsupportinvestmentingridflexibilityandothermarkets,fossilfuelsandenergyproviders.intelligence.Howtoachievethiswillvarybymarketandconsumergroup.Eachcompanywillneedtodetermineitsownstrategy,consideringarangeofproducts,servicesandexperiences.Andthesuccessofthesestrategieswilldependonacompany’sabilitytomeettheneedsofachangingenergyconsumer.31Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?IMPLICATIONSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsImplication12345678ConsumerstaketheleadClosingthegapbetweenconsumerintentandactionEYresearchfindresidentialconsumersareinspiredandcommittedtoplayingtheirpartinbuildingacleanenergyfuture.Fortypercentareconsideringpurchasingenergy-efficientappliances,andabouthalfareconsideringanEV.Butthere’sagapbetweenintentionandaction.Consumerssaymakingchangesistoodifficult,tooexpensiveorjustconfusing.Howcanweclosethegapbetweenintentandaction—andacceleratetheadoptionofsustainableenergybehaviorsandnewenergytechnologies?Theseactionscanhelp:Collaboratetocreateconsumer-centricecosystems:Haveyouinstalledrooftopsolaroraheatpump?Howmanycompaniesandgovernmentagenciesdidyouinteractwithalongtheway?Collaborationacrossindustriesandgovernmentcouldreinventtheexperienceintoonethat’seffortlessandmoreaffordable.Targetlifestylesandindividualactions:Decisionsabouthowweuseenergyarepartofbiggerlifestylechoicesdrivenbypersonalvaluesandpriorities,includingsustainability,convenienceandthedesiretosavemoney.Tailoringenergysolutionstomeetthesedifferentneedscanacceleratetheiradoption.Valuetheenergyintangibles:Showinghowrenewablesandgreenersolutionscandeliverotherimportantconsumerintangibles,includingcommunityandsocialimpact,choice,convenienceandcomfort,couldstrengthenconsumerconfidenceinachangingenergysystem.Masterbehavioralscience:AccordingtoEYresearch,abouthalfofusthinkit’sokaytooffsetourpositiveenergyactionswithnegativeones.Focusingpurelyonsustainabilitymessagingorpriceisn’tenoughtodriveconsumerchanges.Understandingbehavioralscience—whywedowhatwedo—helpstapintovaluestoinfluenceenergyinvestmentsandactions.YoucanreadmoreabouttheEYEnergyConsumerConfidenceIndexhere.32Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?IMPLICATIONSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsImplication12345678ConsumerstaketheleadHowthesurgeinEVsandheatpumpsalesConsumeruptakeoftechnologywillvaryacrossregionsIncoremarkets,EVsareenteringthemainstream;salesinEVadoption(%ofsales)theUS,ChinaandEuropewilloutstripallotherenginesalesGlobal28%53%74%86%92%94%by2032.UptakeisbeingdrivenbypledgestophaseoutsalesofICEvehicles,commitmentfromautomakerstoanelectricEurope36%74%99%100%future,andgreaterchoiceofvehiclesatpricepointsthatarecomparablewith,orlowerthan,theirICEequivalents.17%43%70%92%100%USHeatpumpsalesarealsoontherise,astechnologyadvancesandsomegovernmentsmandatetheiradoptiontohelpcutChina36%51%77%85%90%94%emissions.Ourmodelingsuggestsheatpumpuptakewillincreasefasterthansomepredict,outpacingfuel-basedHeatpumpadoption(%ofsales)heatingsystemsasearlyas2028,largelybecauseoftrendsacrossEurope,theUSandChina.Global42%63%77%89%96%98%Europe39%59%78%94%99%100%US48%63%78%91%98%100%China46%60%73%84%91%96%203020352040204520502025Source:EYanalysisofERTAmodeldata.33Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?IMPLICATIONSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsImplication12345678SupplychainsareredefinedFundingexplorationanddevelopmentwillrequireinvestmentinminingandmetalstosignificantlyincreasefromcurrentLocalized,renewableenergy,aswellasthelevels.OursurveyofglobalminingandmetalsleadersrevealedproliferationofenergysolutionssuchasEVsandaccesstocapitalisconsideredthesector’ssecond-highestrisk.offshorewindfarms,willalsoredefinevaluechains.Environmental,socialandgovernance(ESG)issueswerenumberDemandformineralsandmetalsusedinnewenergyoneandhighlighthowimprovingthesector’sreputationcantechnologywillsoar.formpartofthesolutiontohelpincreasesupply(winningovercommunities,investors,regulatorsandtalent).TheroleofminingMeetingdemandwillrequireminerstoovercomethegrowingandmetalscompaniesinsupportingcountries’energytransitionsbottlenecksaroundfinding,extracting,processingandisseriouslyundervalued—changingtheenergysystemsimplytransportingthesemineralsandmaterials.Buildingstrongercannothappenwithoutminers.relationshipswithgovernmentcouldseepermitsissuedfaster,andshortenthetimelinefromdiscoverytoprocessing,butsolvingtheproblemwillrequireminerstodevelopasophisticatedlevelofunderstandingofindividualmarkets.Geopoliticaltensionsareincreasinginmanyregions,andresourcenationalismislikelytorisefurther,leadingtomoreroyaltiesandrestrictions.Minersmayneedtoconsiderpartnershipswithlocalbusinessesasaresponsetoprotectionism.Andstrategicallianceswithotherindustries,suchasautomakers,cancreateintegratedvaluechainsthatreducecostsandfriction,openupaccesstonewsourcesofcapital,andspeedupthebuildofnewenergytechnologies.34Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?IMPLICATIONSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsImplication12345678SupplychainsareredefinedMineralsandmetalscriticalitymatrixWhichmineralsandmetalsaremostcriticalNotcriticalNearcriticalCriticaltoournewenergysystem?4NickelLithiumDemandissettosoarformineralsandmetalscritical910%tobuildingnewenergyassetsandinfrastructure.Weconsideredmultiplechallengesandfactors111%Rareearthsimpactingthesupplyofthesemineralsandmetals943%—includingESGpressures,geopolitics,accesstocapital,regulationandpotentialthreatofsubstitutes—ImportancetoenergytransitionCoppertodevelopacriticalitymatrix.108%3GraphiteCobalt264%207%2Aluminium55%1Bubblesizeindicates%growthindemand2022to20501234SupplyriskSource:USDepartmentofEnergy;ArgusDirect;S&PGlobal;IEA(NZE);CreditSuisse:EuropeanAluminium;EUJointResourceCentre.CriticalityofmineralandmetalsisbasedontheUSDepartmentofEnergyassessmentofimportancetoenergyandsupplyriskover2025–35.Supplyriskiscalculatedonthebasisofavailability,competingtechnology,ESGandgeopoliticsandco-dependenceonothermarketsaswellasextentofproducerdiversity.35Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?IMPLICATIONSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsImplication12345678SupplychainsareredefinedSolvingthecopperconundrumAlmosteverynewenergytechnologycontainscopper.Onewindturbineincludesthreetonnesofit,andbuildinganEVrequiressixtimesasmuchasaconventionalcar.Butsupplyisstrugglingtokeepupwithdemand,whichisforecasttoalmostdoubleby2035.Howcanminerssolvetheproblem?It’scomplicated.Newminesarepartoftheanswer,buttheytakedecadestocomeonline.Inthemeantime,somecompaniesareexpandingbrownfieldsites,whileothersarereopeningclosedmines.Butboostingsupplyatspeedwilldependonmorenovelapproaches,includinginnovationthathelpsminersgetmorecopperfromexistingreserves,andunexpectedsources.Acidleachingtoextractcopperfromwasterockisnotnew,butRioTintoandpartnershavedevelopedasecondarybacteria-basedleachingprocesscapableofextractingcopperatfarlowerconcentrations(<0.5%comparedwiththetypicalgradeofaround0.6%to1.0%).AUSchemicalcompanyhasdevelopedasimilartechniqueusingyeast.Leachingrequireslowcapitaltosetupandrun,producesnocarbonemissionsandusuallydoesn’tneedregulatoryapproval.RioTintoandotherssaythattherecouldbeasmuchas100milliontonnesofcoppersittinginwasterockatminesaroundtheworld.Recyclingwillalsobepartoftheanswer.Recycledcopperaccountedforabout32%ofcopperdemandduringthelastdecade,accordingtotheInternationalCopperAssociation,andwillonlygrowasmoreEVs,batteriesandotherenergycomponentsreachtheendoftheirlife.Ofcourse,theproblemisnotonlymining’stosolve.EngineeringadvancesacrossotherindustriescanreducetheneedforcopperinEVs,batteriesandotherenergytechnologiesandassets.Forexample,theuseofaluminiuminundergroundandsubseacablesislikelytoreducedemandforcopperbymorethanone-thirdfromcurrentlevels.Butthismayfurthercomplicatetheissue—shiftingdemandawayfromcopperwillimpactitsinvestability.Andthismaybethebiggesthurdleofall.Tomeetforecastdemand,investmentincopperminingwillneedtoincreasetomorethanUS$250bayearby2030,upfromaroundUS$105btoday.Securingcapitalwillbecriticaltosecuringsupply—andtheworld’stransitiontoanewenergysystem.36Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?IMPLICATIONSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsImplication12345678IntegrationofoldandnewenergysystemsUnderpinningeverythingwillbetheneedtobringanewenergysystemonlinewhileretiringandrepurposinglegacyassets.Thiscomplexbalancingactrequiresconsiderationofmultiple,sometimescontradictory,issues,includingmaintainingsecuresupply,reducingcarbonemissions,minimizingjoblosses,andensuringenergyandresourcescompaniesstayinvestable.Itwillalsorequirehugeinvestment.Weforecastthatenergytransitionannualinvestmentsneedtoincreaseby300%by2050andwillrequireasignificantscalingupoffinancialresourcesandinvestmentflowsintolow-carbontechnology.Decisionsaboutlong-terminvestmentswillbemadeascompaniesgrapplewithmoreimmediatedilemmas—howtobalancethethreatofobsoleteassetsimpairmentwithotherrisksthatarisewhenoldassetsoperateforlonger.Shiftingcapitalportfolioswillbehelpedalongbycarbonpricing,butitwon’tbethewholesolution.Governmentinterventionmaybeneededtoincentivizeinvestmentinrenewablesthatdeliverlowerratesofreturnthanhydrocarbons.37Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?IMPLICATIONSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsImplication12345678IntegrationofoldandnewenergysystemsHowinvestmentinlow-carbonGlobalannualcapitalexpenditurebylow-carbontechnology(US$t)technologywillincreaseUS$t54.1GrowthincleanpowergenerationAnewenergysystemisemerging,butitwillrequire4investmentsfromUS$0.6tinannualinvestmentinlow-carbontechnologiesto32.72025toUS$2.1tby2050increasefourfoldby2050.Closingthegapbetween22.1investmentsrequiredandthecurrentlevelswillinvolveGrowthinelectricmobilityasignificantscalingupoffinancialresourcesand1.6investmentsfromUS$0.3tininvestmentflowsintorenewableenergyandrelated11.02025toUS$1.5tby2050infrastructure.4xAnewenergysystemisemerging,020302035204020502025butitwillrequireannualinvestmentHydrogeninlow-carbontechnologiestoCleanpowergenerationCleantransportIndustrialheating/coolingincreasefourfoldby2050.BioenergyCommercialheating/coolingResidentialheating/coolingCarboncaptureSource:EYanalysisofERTAmodeldata.38Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?PrefaceDriversImplicationsHandbrakesOpportunitiesContactsHANDBRAKESWhyweneedtoaddressriskstoprogress39Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?IMPLICATIONSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsReleasingthehandbrakesThespeedoftheenergytransitionwillvaryastechnologyadvances,policiesevolveandsocietalattitudesshift.Butseveralissuesposeaseriousrisktoprogress—releasingthese“handbrakes”throughcollaborationacrosscompanies,governmentsandconsumerscouldfast-trackchange.SupplychainconstraintsTheworldhasenoughofthecommoditiesandcriticalShort-termismmayMakingtheenergytransitionhappenwillrequirecouldhaltthebuild-outmineralsneededtobuildnewenergyassets,buthindercapitalraisinginvestmentofasizeandscaleneverseenbefore.Butofnewenergyassetstheyareconcentratedwithinahandfulofcountries.currentreturnsdon’tincentivizeinvestmentwhereTheriskisthatrisingresourcenationalismandit’sneeded,whichmaymakeittoughforenergyandgeopoliticaltensionscoulddisruptsupply,pushupresourcescompaniestosecurethecapitaltheyneed.costsandincreasemarketvolatility.ChinadominatesMeetingshort-termshareholderdemandsandjugglingprocessingofalmostallcriticalminerals.therisksofkeepingoldassetsoperationalcouldhindercompanies’investmentinthefuture.InconsistentregulatoryAcrosstheworld,regulatoryframeworksaroundRenewablesdon’t(yet)Withouttherightincentives,subsidiesandcarbonpricing,environmentscouldcleanenergydifferaccordingtogovernmentdeliversufficientreturnsreturnsonrenewablesandotherlow-carbontechnologydisincentivizeinvestmentpriorities,societalattitudesandenergyneeds.Thisinvestmentswon’tbeenoughtoacceleratechangeatcreatesinconsistentinvestmentconditionsforenergythepaceweneed.Currentreturnsoncleanenergyandresourcescompaniesandcouldslowprogress.arearound6%,comparedwithdoublethatormoreforupstreamoilandgas.40Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?IMPLICATIONSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsReleasingthehandbrakesDecreasingdemandOilandgaswillplayanimportantroleintheenergyTalentshortagemayAcrossenergyandresources,askillscrisisislooming.foroilandgasrisksmixforsometime,butdecreasingdemandanddeprivethesectorofAnagingworkforceispartoftheproblem—about50%deterringinvestorscarbonpricingwillalmostcertainlyimpactrevenuescriticalskillsofminingengineerswillretireinthenextdecade—eventually.ContinuingtoattractinvestmentdespitebutperhapsmoreconcerningisadearthofyoungInnovationdependsontheriskoflowerreturnswillbecriticalifcompaniesConsumerscouldloserecruitsanddifficultyincompetingfortalentwithnew,fasteradoptionofstillaretofunddecarbonizationanddigitaltechnologies.confidenceinachangingin-demandskills.NinetypercentofpowerandutilitiesunproventechnologyenergysystemexecutivessaytheyhaveveryfewworkerswiththeWe’llneedamixofmatureandearly-stagedigitalskillstheyneed.Closingtheskillsgapwillrequiretechnologiestodrivetheenergytransition.Adoptingcompaniestothinkbeyondtheobvious—theindustrynewtechnologycanbringhighercostsandrisksforalreadyoffershealthysalaries—andidentifyawinningenergyandresourcescompanies,butwaitinguntilemployeevalueproposition.costscomedowncouldslowtheinnovationneededtosolvechallengessuchasintermittency.IntelligentOurresearchsuggeststhatconsumers’dissatisfactionincentivesfromgovernmentcouldgoalongwayinwiththeenergyexperienceisalreadyunderminingtheirbridgingthisgap.confidenceintheenergysystem.Thisisimportantbecauseconfidentconsumersaremorelikelytoinvestinnewenergysolutions,adoptsustainablebehavior,andinfluencecorporatesustainabilityandgovernmentpolicy.Creatingenergysolutionsthatgiveconsumerswhattheywant,beyondthebasics,canboostconfidenceandmobilizesustainabilityactions.41Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?PrefaceDriversImplicationsHandbrakesOpportunitiesContactsOPPORTUNITIESHowenergyandresourcescompaniescancreatevalue42Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?OPPORTUNITIESPrefaceDriversImplicationsHandbrakesOpportunitiesContactsTheimplicationsofachangingenergyOpportunitiesforenergyandresourcescompaniessystemcreateuncertainoperatingconditionsforenergyandresourcesAchangingenergysystemhascreatedunprecedentedcomplexityanduncertainty.Organizationswillneedtocompanies.Adaptingtochangewillstrategicallymanagedualchallenges—strengtheningthecurrentsystemwhiledevelopingforthefuture.exposeorganizationstonewrisks–bigoperationalshiftsalwaysdo–butweMiningOilPowerbelievetheriskofnotchangingwillbefarandandandgreater.gasmetalsutilitiesDecliningrevenue.Shrinkingmarketshare.SeizeandscaleDifficultyaccessingcapital.AndascarcityofBuildtrusttothegrowinggreenUnlockthegridandtalent.TheseconsequencesmayhitdifferentcompeteforcapitalmoleculemarketcreateaflexibleplatformsectorsandcompaniesatdifferenttimesbutaretheinevitableoutcomeforeveryenergyandandlaborSafelyreducethecostofoperationsforinnovationresourcescompanythatdoesn’tembracechange.andyourcarbonfootprint.FocusESGeffortstobuildContinuetobuildoutrenewablesAlternatively,organizationsthatactnowcanthebrand.Getyouralternativemoleculeatpace—whereitmakessense.seizeahugeprize.Theopportunitiesunfoldingasofferingright.theenergysystemtransitionsarehuge,andwillBuildaportfoliothatcatersforInvestingridflexibilityandonlyincreaseasthepaceofchangeintensifies.futuredemand.Planfordownstreamintermittencymanagement.Makingthemostoftheseopportunities,whilemarketdisruption.mitigatingrisks,willdependonidentifyingandBalancenewbusinessmodelsResetyourrelationshipwithcommittingtoappropriateno-regretactionsforwithcoreactivities.thecustomer.theyearsahead.GetclosertogovernmentstoReshapeyouroperating43Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?combatresourcenationalism.modeltofit.Investininnovationtoreduceemissionsalongthesupplychain.OPPORTUNITIESPrefaceDriversImplicationsHandbrakesOpportunitiesContactsMiningandmetalsBuildtrusttocompeteforcapitalandlaborThereisnoenergytransitionwithoutminingandmetals.•Balancenewbusinessmodelswithcoreactivities.Dependingonaminer’smarket,theroadaheadwilllookveryDemonstratingthesector’svalueisnowanurgentpriority.Securingdifferent.KnowingwhichbetstoplacewilldependonadeepercapitalLTOisthepriorityforminers,andlargelyachievedbyThechallengeforminersisaddressingtheneedtoinvestinunderstandingofthetrajectoryoftechnologyadoptionacrossbuildingtrust.Minersthatshifttheirfocusfrompurelyshort-termnewbusinessmodelswhilemaintainingdisciplineandreturns.multiplemarkets,aswellasinsightintopotentialgeopoliticalprofitstolonger-termvaluecanwinoverinvestors,enabletheEYanalysisshowsmostcompaniesarefocusinginvestmentimpacts.Weseeevidenceofhowdifferentcompaniesaredevelopmentofnewmines,attracttalentandmitigategeopoliticalintraditionalorcoreactivitiessuchasexploration,miningapproachingtheseissuesinvaryingways.Forexample,somevolatility.andprocessingtoensurereturnsremainstrong,andcanfundorganizationsarespinningoffpartsofthebusinessthatdealinvestmentsinsustainability,technologyandnewbusinesswithcriticalmineralsintoseparateentities,toattractabroaderTheseno-regretactionscanhelpguidetheway:modelssuchasverticalintegration,investinginadjacenciesinvestorbase.Othersareexploringhowpartneringwith(renewablesandinfrastructure)andthecirculareconomy.companiesinadjacentindustries,suchasautomakers,couldhelp•FocusESGeffortstobuildthebrand.IdentifyyourESGfocus.boostinvestmentintoexplorationandproduction,andtapinto•Getclosertogovernmenttocombatresourcenationalism.governmentincentives,includingtheUSInflationReductionAct.Someminersareprioritizinglocalcommunityengagement;othersarecommittingtonetpositivebiodiversityimpactorForgingstrongerrelationshipswithgovernmentcanhelpwaterstewardship.Determinewherevalueliesforyouandadoptweatherinevitableregulatoryvolatility.along-termstrategytoachieveit.Investinthedigitalanddatacapabilitiesneededtomonitor,measureandreportonprogress.•Investininnovationtoreduceemissionsalongthe•Buildaportfoliothatcaterstofuturedemand.Planforsupplychain.Demandfromcustomersformoresustainablesupplychainscreatesopportunitiesforminersthatinvestpossiblealternativefuturesbyconsideringamixofstrategies.indecarbonizingoperations,aswellassolutions,suchasThesemayincludebuildingoutreserves,anddivestingorblockchain,thattrackandtraceemissionsfromminetomarketinvestingindifferentmineralsandmetals,andnewtechnologies.andbeyond.AbatingScope3emissionsisnowanimperative,orConsiderhowinnovation,includinginbatteries,mightdisplaceminerswilllosecompetitiveadvantage.projectedmineraldemand.44Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?OPPORTUNITIESPrefaceDriversImplicationsHandbrakesOpportunitiesContactsOilandgasSeizeandscalethegrowinggreenmoleculemarketForoilandgascompanies,thechallengewillbebalancinganeed•Getyouralternativemoleculeofferingright.MarketswillBeyondthis,strategicchoiceswilldifferbycompany.Eventoinvestinnewtechnologies,whilekeepingcoreassetsoperatingorganizationsthatappearverysimilarandoperateintheforlonger.Upstream,midstreamanddownstreamcompaniesfaceemergefornewmolecules,butunderstandinghowandwhensamemarketsmaytakeverydifferentpaths,dependingondifferentoperatingenvironments,butallshouldconsiderhowto(andif)thesemarketsworkfromaneconomicandtechnicaltheircurrentstrengthsandfutureambitions.Forexample,decarbonize,diversify,digitalizeandevendisruptthemselves.standpointwillbecritical.Focusingonmoleculesclosesttointernationaloilcompanies(IOCs)basedinEuropearecurrentcapabilities(includingdecarbonizingfossilfuelswithbecomingintegratedenergycompanies,withportfoliosthatmixTheseno-regretactionscanhelpcompaniesgetstartednow:CCUS)andleveraginggovernmentincentivescanhedgerisk.hydrocarbonsandnewenergies.Bycontrast,USIOCsandMiddleBeforedecidingtoinvest,besuretounderstandwhethertheEasternnationaloilcompaniesarecontinuingtofocusonoiland•Safelyreducethecostofoperationsandyourcarboneconomicsmakesensetotheenduser(i.e.,beyondrelativegas,prioritizingcost,operationalandcarbonresilience.costsofproduction).footprint.Decliningdemandwilleventuallypressuremargins,requiringalaserfocusoncostandefficiency.Stakeholder•Planfordownstreammarketdisruption.Understandwherepressureandincreasingcarboncostswillmakedecarbonizationapriority.Focusoncuttingemissionsintheshorttermbychangingdynamics,suchasEVadoption,willhitthebusinessremovingmethane,addressingroutineflaring,electrifyinghardest,andbereadyforanewkindofenergycustomer.drillingandprocessingoperationsandrecyclingCO2intoReviewcurrentretailandB2Bportfolios,andcreateaplanenhancedlift.toevolvethem.Developaseriesofmoreattractivevaluepropositionsfordifferentcustomers.45Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?OPPORTUNITIESPrefaceDriversImplicationsHandbrakesOpportunitiesContactsPowerandutilitiesUnlockthegridandcreateaflexibleplatformforinnovationFundamentalshiftsinhowenergyisproduced,distributed•Investingridflexibilityandintermittencymanagement.Developingasuccessfulstrategywilllargelydependonandconsumedwillchangeeverythingforpowerandutilitiesmakingtherightchoicesattherighttime.Thisrequiresacompanies.ChallengesaroundtheriskofstrandedassetsandgridAdoptdigitalsolutionsthatsupportactivenetworkmanagementdeepunderstandingofhow,whenandtowhatextentdifferentmodernizationmustbeovercomeatthesametimeascompaniessystems,localenergymarketsandflexibilityplatforms.Considerimplicationswillaffectmultipleenergytransitions,aswellastheconsiderwhichnewtechnologiesandconsumersolutionsofferthefeasibilityofregionalinterconnections.impactofpolicyandtechnologyacrossmarkets.Forexample,anthebestopportunitiesforgrowth.Treatingthegridasaflexibleenergyretailerinacompetitivemarketmaydecidetoharnesstheintelligentplatformcanhelppowerandutilitiescompanies•Resetyourrelationshipwiththecustomer.PutconsumersatpotentialofgrowingEVadoption.Offeringpersonalizedenergycapturevaluethroughinnovation,newservicesandalternativesolutionsthatbundlechargingservices,batteriesanddemandbusinessmodels.theheartofthebusiness,identifyingwhatmotivatesthem,whatmanagementcancreatedifferentiation,andalsohelpembedtheyvalue,gapsincurrentenergysolutionsand,crucially,theflexibilityintothegrid.Ontheotherhand,transmissionsystemTheseno-regretactionscanhelpcompaniesgetstartednow:commonthreadacrossallofthese.Investinthetechnologyandoperatorsinregulatedmarketsmightprioritizeinvestmentinbusinessmodelsthatovercomebusinesssilosandallowyoutotechnologies,suchasdynamicvoltagecontrol,thatcanbetter•Continuetobuildoutrenewablesatpace—whereitmakesofferaholistic,integratedcustomerexperiencethatbettermeetsbalancesupplyanddemand—andarticulatingthevalueofsuchneedsandcapturesmorevalue.investmenttoregulatorsandgovernment.sense.Considerthespeedofthetransitioninyourmarket,understandtheimpactofregulatoryframeworks,makesure•Reshapeyouroperatingmodeltofit.Identifyyourcoretimelygridconnectionisfeasible—andchecktheeconomicswork.competenciesandinvestinstrengtheningthese.Adoptadigital-firstapproach,investingindigitalizingandstreamliningoperations,products,servicesandexperiences.46Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?CONTACTSPrefaceDriversImplicationsHandbrakesOpportunitiesContactsAuthorsSergeColleAndyBroganSauliusAdomaitisPaulMitchellEYGlobalEnergy&ResourcesEY-ParthenonEnergyEYGlobalOil&GasEYGlobalMining&MetalsLeaderLeaderLeaderLeaderContributorsAndrewHorsteadAngieBeifusPaulBogenriederEYGlobalPower&UtilitiesEYGlobalMining&MetalsEYGlobalOil&GasAndreWinartoLeadAnalystLeadAnalystLeadAnalystEYGlobalEnergy&ResourcesKnowledgeLeaderey.com/energy47Ifeveryenergytransitionisdifferent,whichcoursewillaccelerateyours?EYBuildingabetterworkingworldEYexiststobuildabetterworkingworld,helpingcreatelong-termvalueforclients,peopleandsocietyandbuildtrustinthecapitalmarkets.Enabledbydataandtechnology,diverseEYteamsinover150countriesprovidetrustthroughassuranceandhelpclientsgrow,transformandoperate.Workingacrossassurance,consulting,law,strategy,taxandtransactions,EYteamsaskbetterquestionstofindnewanswersforthecomplexissuesfacingourworldtoday.EYreferstotheglobalorganization,andmayrefertooneormore,ofthememberfirmsofErnst&YoungGlobalLimited,eachofwhichisaseparatelegalentity.Ernst&YoungGlobalLimited,aUKcompanylimitedbyguarantee,doesnotprovideservicestoclients.InformationabouthowEYcollectsandusespersonaldataandadescriptionoftherightsindividualshaveunderdataprotectionlegislationareavailableviaey.com/privacy.EYmemberfirmsdonotpracticelawwhereprohibitedbylocallaws.Formoreinformationaboutourorganization,pleasevisitey.com.©2023EYGMLimited.AllRightsReserved.EYGno.011238-23GblBMCAgencyGA154152662EDNoneThismaterialhasbeenpreparedforgeneralinformationalpurposesonlyandisnotintendedtoberelieduponasaccounting,tax,legalorotherprofessionaladvice.Pleaserefertoyouradvisorsforspecificadvice.ey.com
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