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Current± Predicts: The energy transition in 2020, part seven

Image: Npower.

Image: Npower.

Current± editor in chief Liam Stoker serves up his predictions for what the energy transition may hold in store for 2020.

More supply market carnage

If energy suppliers thought 2018 was a difficult year, then they are unlikely to have been prepared for what this year held in store. A total of 14 retailers went bust in 2019 as headwinds increased significantly. And those headwinds only look set to continue, as Ofgem’s price cap remains in place, energy prices look as volatile as ever and consumer churn continues to gather pace. Npower is evidence enough that this is not just bearing bad news for the little guys either, and it’s not beyond the realms of possibility that an established name ends up in serious trouble. OVO’s pursuit of SSE has been all but cleared, representing the most significant change to the Big Six since the market was privatised in 1990 – I wouldn’t be surprised if that’s not the only change to the incumbent make-up in 2020.

Subsidy-free renewables hit the mainstream

Something of a cheat prediction here as, in truth, this has been coming down the pipe for the last few years at least. But there is now real momentum behind subsidy-free renewables developments, with onshore wind and solar projects coming to fruition sans subsidies for the first time in earnest. The real difference for 2020 will be the scale at which they come forward, and the names of those energising them. Renewables is now the hunting ground of household names, not the cottage industry it was as late as 2015, and the next decade looks certain to kick off early in this regard. Standalone developments will surely happen, but hybridisation is the talk of the town at the moment and we could see solar-plus-wind-plus-storage projects start to emerge as the power station of the future.

A major, left-field piece of M&A will catch the industry by surprise

The pace at which mergers, acquisitions and investments occurred showed little sign of abating in 2019, and there’s every expectation this will continue into the 2020s as well. To date, one of the only certainties of the energy transition has been uncertainty, and energy companies have been quick to bolt-on knowledge and expertise as quickly and as efficiently as possible. Shell and BP are perhaps the best, most well known examples of this, establishing entire divisions with hundreds of millions of dollars in M&A firepower to ensure they have everything they need to navigate the energy transition. But what if the next major energy player isn’t an energy player at all? We’ve already seen Mitsubishi make some quite sizeable investments in the energy landscape and I wouldn’t bet against the industry being caught out by an entirely new entrant coming to the fore in 2020.

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