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Technology threatens energy companies

PA energy expert, Anders Ørding Olsen, discusses how technological advances will disrupt the energy sector. According to Anders, one of the biggest threats is distributed generation of electricity. Research shows that solar power cell prices will continue to decrease by 10 per cent per year. Moreover, several experts predict battery storage prices will be halved in the course of the next five years, meaning a household’s production of solar power can be stored and used after working hours. 

“This will improve the economics and applicability of distributed generation and may threaten the profitability of the large energy plants – regardless if these are fueled by coal, gas, bio mass or wind,” says Anders.

Moreover, the liberalization of the energy sector has rendered it possible for new players to threaten the position of the incumbent energy companies. Companies such as Apple, Microsoft and Google see a big potential in handling the control of the components and services of a private home, such as the sale of electricity, through new technologies and improved customer experiences.

“With this kind of disruption and falling electricity prices, it is no longer a given that energy companies’ current earnings on electricity production, distribution and sale can be maintained,” Anders concludes.

Anders Ørding Olsen is an energy expert at PA Consulting Group.

Contact the energy and utilities team


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