Few would argue that energy technologies have enormous growth prospects, or that firms across the energy economy face huge strategic choices.  Over the past six years, energy technology has grown from 3% to 25% of all venture capital investments.  Oil majors have made big bets on green energy, and electric utilities have fundamentally re-thought their corporate strategy and future business models.  Change is happening fast.

In such heady new markets, the challenge is to create business strategies that exploit upside while hedging risks.  In generation technology, few firms can lead the race to create the product with the lowest cost per watt.  Companies need to carefully:

• Select their target markets
• Craft an offering that is truly differentiated for this set of customers
• Create an ecosystem of firms supporting the product
• Address the hurdles toward broad technology adoption.  The best technology is not necessarily the winner in new markets.  Just ask Sony about the Betamax.

For electric utilities, the potential of long-term demand growth from economic expansion and electric vehicles combines with new promise from demand-side management programs, smart grid rollout, and distributed energy generation to create a turbulent atmosphere in which to lay plans. These challenges are exacerbated by regulatory uncertainties.  Given the need for new capacity to replace aging, dirty, or insufficient generation and transmission assets, utilities cannot afford a “wait and see” approach to developing a strategy that ensures future success.

Service Offerings

For energy technology-focused clients, we have assessed what makes certain products penetrate new markets rapidly, while others cannot get traction.  We focus our clients on finding “footholds” that will embrace new technologies and validate them for broader swathes of customers.  These footholds may sometimes be tiny, but they boast characteristic traits that make them grasp new propositions quickly and prove their viability.  Counter-intuitively, firms can speed their growth through first tightly focusing on these footholds.  The battery technology company A123 first marketed its nanoscale electrode products in Black & Decker power tools before winning the contract to power the Chevrolet Volt.

Electric utilities, by contrast, are increasingly re-considering their corporate strategy.  While they often have reams of projections about future demand and costs, they sometimes lack a process for weighing this data against future scenarios.  They also need to ensure that they carefully consider the business model implications of smart grid, electric vehicle recharging stations, and other major innovations re-shaping their environment.  We provide these firms with a disciplined approach for strategy formulation that has been developed specifically for markets undergoing disruptive change.

These are exciting times for the energy industry.  Complete our short form and we will send you our presentation on how to navigate these new markets.