Shankar Krishnamoorthyg

Article published on LinkedIn by Shankar Krishnamoorthy, Executive Vice President in charge of Strategy & Innovation at ENGIE, May 16, 2019

As I am at the Industry Strategy Meeting of the World Economic Forum to discuss the challenges of tomorrow's world, I'd like to tell you more about the transformation of the energy business. I've been with the energy industry for 35 years, and I've never seen it as fascinating as it has been in the past five or ten years.

Let me start with something very obvious and on which everybody agrees:

The arrival of renewables has made the business of producing electricity much simpler.

It has lowered the entry barriers into the sector. A lot of players have come in on top of the incumbent utilities, who used to run this business for a century.

It's happening at a time when the demand for electricity is growing rapidly. It's happening not just because of India, China and other developing markets. It is happening also because of new appliances and usages: electric vehicles, connected objects, data centers... So we foresee a very significant growth: from 25,000 terawatt hours that the world consumes today to 40,000 terawatt hours in 20 years. As an illustration, believe it or not, in 30 years from now, a quarter of Germany’s electricity demand will be for electric vehicles.

In this ocean of commoditized energy with a booming competition, islands of sophisticated needs are emerging. Let me give you some examples:

  • Some clients want renewables 24/7. They want some form of attachment to a plant, to say: “that's the plant where my electricity comes from.” This creates new possibilities to do business. So there have to be players in the world who understand the business of setting up plants anywhere on the grid, certifying the origination, delivering renewables 24/7 with smart grids and storage to deal with intermittency and seasonality.
  • When you are running a business, you got this non-core stuff around energy and it’s getting more complicated by the day especially if you want a lower carbon footprint. It becomes much better if it's done by somebody else with his own capital, somebody who is an expert. An increasing number of clients are saying “take my stuff away from me, invest capital into it, guarantee me a long term low price and keep giving me what I was doing myself, lighting, cooling, heating, mobility.” This is the “as a service” model.

At ENGIE, we have the ability to combine renewable production, smart networks and the full range of energy efficiency possibilities to deliver long-term integrated and sophisticated solutions to our clients, designed for their own specific needs.

We are an accelerator of the zero-carbon transition: we will continuously integrate innovations as they reach maturity, to make zero-carbon transition possible for our clients, especially industry and local authorities.

But we are not simple aggregators: we will commit to a level of performance and devise the best way to achieve it. We will remove the risk from our clients and manage it thanks to our knowledge and our panel of solutions.

This vision that we called “as a service” is now the way to go to create value in the energy market both for our clients and our shareholders.