New pre-conditions in the energy sector – What does this mean for the T&D industry?

A beginning of a new era

According to World Energy Council, the global demand for energy (transport fuels, heating etc.) will peak in 2030 due to efficiencies created by new technologies and more stringent energy polices while the global demand of electricity is expected double by 2060. The reason for this is that electricity is the most efficient way to transport all kind of different energy sources to consumers by making it available when needed through the grid. In addition, by utilizing new technologies for energy storage, off-grid solutions are being developed that will be a “game changer” and create new business models. However, the demand will require large investments in smart systems that promote energy efficiency.

There are several different key drivers that push the need for new investments in our global power systems. Politically agreed targets for reducing CO2emissions, integration of large amounts of new intermittent renewable power generation e.g. wind and solar power, electrification of the transportation sector and upgrading the aging and sometimes obsolete T&D assets mainly in Europe and North America, just to name a few. In many countries and regions, the power systems have been developed over many decades based on the power generation and power consumption pattern that existed at that time. With all these changes that are currently happening, the people at system planning departments at TSO’s, regulators, power equipment and system suppliers as well as other key players are busy in defining the impact and the investments needed to meet these new requirements

Transformation of the T&D industry – the world is shrinking

Historically, power equipment sales have been quite a local business i.e. many countries used to have its own domestic suppliers of power transformers and other equipment. Even the large multinational companies like ABB, Siemens and GE were mainly supplying the domestic and regional markets from its different factories. Power generation and grid companies only focused on its home market and did not even think about investing abroad. Today, the situation is completely different. Focused factories serving global customers and new suppliers from low cost countries making its products available for export are today a natural part of the business. Many of the power generation and grid companies are today investing in assets outside its home countries and markets. The industry is global and the globalization is making the world smaller. 

This transformation leads to increased competition and new opportunities, both for the asset owners and for the suppliers. Buyers are looking for new suppliers globally that meet its requirements and are cost competitive while sellers are looking for new channels to get its products out to new markets. There are many good and competent suppliers who today are stuck in their home market or region and have great challenges to gain access to new markets because of difficulties in building up new sales channels. The trick is to achieve this in a cost-effective manner without compromising on quality.Focusing and prioritizing are key factors for success. Build on the existing strengths that the company already possesses to create the first success that can then create new successes. Too often, you see companies that want to conquer the whole world directly and mortgage large volumes before they have secured the first order. Usually, this is not a successful strategy.

Golden opportunity for Buyers and Sellers of power products and power systems

Living in times of changes could sometimes seem scary and difficult. However, if you take a professional approach to the new market conditions and make sure that you understand the needs and requirements, you are well positioned for being successful. As described above, we are in the beginning of a new era that will support a strong market for power products. 

One thing is very clear: Being part of the electricity business provides golden opportunities to develop good businesses. If you take advantage of the ongoing changes, the future is yours. 

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