Show Accessibility Options

Hide Accessibility options

The New Energy Letter: August 2019

How to avoid the fate of Kodak in the energy transition?

Kodak didn’t fail because it didn’t know about digital cameras. In fact, it developed one of the first consumer digital cameras and in 2005 was the largest seller of digital cameras in the US. But in 2011 its share price fell by 80%, and in 2012 it filed for Chapter 11 bankruptcy.

Energy companies recognise that we are in the midst of an energy transition. But, like Kodak, just recognition of a transition is no guarantee of success or survival. I see traditional energy companies responding in three ways.

  1. Doing nothing. Dazzled by the bright lights of uncertainty, they find it too hard to make decisions – bar the old publicity-driven pilot or demonstration. There is a minority, but meaningful number of companies still in this group today.
  2. Doing something. Too often I see a series of disconnected, sometimes half-hearted, activities without a coherent approach. Unfortunately, this is where I would place the majority of companies today.
  3. Of course, the right approach is a considered and consistent set of actions, with the right balance of short- and long-term horizons. These companies build a strong understanding of how markets are changing, and a strong view as to where they are headed. A growing number of companies are in this group.

Being in the third category doesn’t guarantee success. Recent news from Centrica illustrates the challenges these companies face. It’s hard to predict when and how quickly revenues will start to decline. The downwards trajectory of Centrica’s old commodity retail business (their cash-cow of ‘sleepers’ who never switched) accelerated more quickly than anticipated last year, contributing to a half-year pre-tax loss of nearly £0.5 billion.

Growing new revenues sufficiently and quickly can be hard. Centrica’s new revenues are growing but the challenge is to grow them fast enough. It now expects their smart home business to generate a fifth of the expected £1 billion of revenue compared to what they originally expected by 2022, as they retreat from their ambitious international smart home aspirations.

Centrica has a clear and considered approach and is doubling down on their focus on customers and services. Their energy solutions business now spans 34 countries. They’ve recently launched Centrica Mobility Ventures and announced a partnership with Ford. Naturally, they’re learning many lessons on the way.

Leave a comment below if you’d like to share your thoughts on the matter, or get in touch via jon.slowe@delta-ee.com

Related posts

Blog

Localisation of energy is starting to transform the energy system

Blog

What role do time-of-use tariffs play in enabling the future of customer collaboration? Examining aWATTar and True Energy

Blog

The epic battle for new energy dominance

Blog

2018-2019: The pivotal years for New Energy

Blog

Is investment an indicator of future success?

Blog

Are the most exciting new energy business model trends too good to be true?

Add yourself to our mailing list

Add yourself to our mailing list