Special thanks to Valerie Besson, Anish De, Robert Johnson, and Stefano Moritsch
The war in Ukraine has dramatically altered perceptions of energy security and accelerated many countries’ decarbonization agenda.
Since the tanks rolled across the Ukrainian border, many power & utilities (P&U) providers had to rethink their energy supply strategies. Having become accustomed to a global market dictated primarily by price, the sector is now adjusting to the idea of sourcing energy only from countries considered political allies.
The European Union (EU) has pledged to cut its gas supply from Russia by two-thirds by the end of 2022, agreed on a partial ban on Russian oil1 and announced a deal to buy an additional 15 billion cubic liters of LNG (liquified natural gas) from the US to reduce its dependence on Russian energy.2 In a way, geopolitical imperatives are now pushing the EU to dramatically accelerate its net zero ambition, as exemplified by its RePower EU plan.3 Even regions less reliant on Russian imports to power their economies will still feel the effect of global energy price volatility in the wake of supply dislocation, western sanctions, as well as self-sanctioning by companies who are wary of reputational damage., a stark reminder of the importance of stable, resilient energy supply chains.
In addition to seeking new conventional energy suppliers, governments, especially in Europe, will be pushing for greater energy efficiency, accelerating the transition to renewables, and investing in nuclear power.
The P&U sector was already undergoing huge disruption before the war, with society’s shift to all things electric, the green energy revolution reshaping grids, and digitalization shaking up ways of working. Add to this evolving geopolitical, supply chain, environmental, investment, cyber, talent, and cost risks, and companies must cope with an uncertain future.