The renewable energy industry in 2023 - our predictions
Inspired by our collaborations and projects with energy industry clients, we were interested in researching further and sharing our perspective on how to navigate the energy industry beyond 2022. To do so, we spoke to our clients and our product teams to see what trends they see forming in 2023. Read on to learn what conclusions we came to.
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In 2023 communities will start forming - says Adam Wolf
At the end of 2022 we had a chat with Adam Wolf, who’s been working for different branches of the energy industry (including solar, and power plants) for 12 years now. Adam has a strong background in research and business, as well as the innovation side of the industry.
Adam belives the entire industry is lagging behind others. In fact, according to the Gartner hype cycle the energy industry is behind by ten years compared to others. As a comparison, fintech is four years ahead of energy (source).
Next year may see the start of communities in the energy market
Prices are going through the roof. At the same time, we are seeing the growth of privately-owned energy. The increase in ownership of energy could bring a community aspect to the table. Adam always thought that it was possible, but only on a proof-of-concept level. Now, we have a business case for it.
How so? A surplus of energy can be given to a friend, sold within the community, or even donated. Adam believes that the next natural step would be the decentralization of ownership and peer-to-peer trading based on blockchain. In 2023 we will see startups using this technology. Something that used to be just dreams and plans, can now become a reality - says Adam.
Energy trading will be on the rise - and that’s not necessarily a good thing
One of the ways businesses can purchase energy is by buying in bulk, enough to satisfy their needs for an entire year. That kind of product is called over-the-counter (OTC) and the most common example of market trading in OTC is the European Power Exchange (source). In 2023 we will see changes in how these kinds of purchases are made.
Trends will shift rapidly this year
Another industry expert (that prefers to remain anonymous) has a different opinion on the matter. He believes that right now, making any predictions regarding the energy market, is nearly impossible. Why is that?
In 2023, the EU will continue its efforts to reduce CO2 emissions. The legislation and directives that they come up with will be a driving force for future trends. Before that happens we can only make predictions based on what is happening at the moment.
Right now, some companies, instead of buying volumes of energy for the entire year, buy energy that will last them from today to tomorrow. These types of purchases are possible with a market mechanism called single intraday trading, also referred to as intraday.
Even household consumers are changing their energy demands and power production in response to the current situation. Accessibility is important and this is where intraday comes to play.
Intraday works quite well now but we can’t predict the future. There might be additional market volume on the intraday market in winter.
Brussels is working on a complete market mechanism that could change everything and affect how intraday trading is used, but no one knows yet what kind of business implications this will have.
Our renewable energy predictions for 2023: flexibility, cloud computing, and Web 3.0 will matter more than ever before
Based on our work with international clients from the renewable energy industry, it is our prediction that in terms of new technologies, the biggest renewable industry trends will be cloud computing and predictive maintenance. These technologies are fairly established in other industries, but renewables are three years behind others.
Also, we believe that more companies should be transforming to work Agile. The past two years have shown that an ability to react quickly to changes can be crucial for the survival of a business. Here’s why we think these, and a few other trends, will be leading this year:
In 2023 it’s “transform, or be forgotten”
It is our observation that the energy industry has always focused on a single business model. Now, it is becoming clear to them that they need to change their mindset and try new business models that can give them new revenue streams.
This need to transform will become a driving force in 2023, and it’s because the energy industry is quite conservative. But there are exceptions.
There is a clear division between the so-called “old guard” and the “new guard”. The latter tend to be quite excited about how new technologies (such as Web 3.0) can be used in the industry.
That is why some companies are actively looking to digitize their business and are already looking for consultants to help them do it. Some of those searches are coming our way.
Renewables will be growing despite supply chain disruptions and recession
Despite market pullback, our renewable energy partners are active. We see signs that the demand is strong, maybe even stronger than ever. We see several reasons for that, but we want to explore more with professionals in the field.
Cloud computing on the rise
Cloud computing will see a widespread migration of digital products towards Amazon Web Services. This platform allows for better scalability, security, and cost savings - and business owners cannot wait to take advantage of it.
The future is bright for Web 3.0
The future of Web 3.0 will be all about the rise of decentralized autonomous organizations (DAO for short). DAOs are a type of organization that is based on an open-source blockchain protocol and require no physical headquarters, nor is it tied to any specific country. The benefits of this solution include decentralization of authority which leads to simplified decision making.
Renewable energy trends in 2023 will bring many challenges, as well as opportunities
In 2023 the renewables industry will see dynamic changes, be it in the gas market, digitization, transformation, or cloud computing. If we take into account that we live in a VUCA world, it’s safe to say that this list will grow within the coming months.
With so many unknown factors, 2023 may seem like a tough year ahead for the energy industry. But it doesn’t have to be - new challenges often come with new opportunities. The renewable energy industry can take full advantage of digital transformation to come up with new, innovative solutions that will satisfy the growing demand.
Contact us if your company is looking to prepare itself for 2023 - we are keen on sharing our experience with you.
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