Energy & Utilities

Renewable energy is creating new business opportunities. Be it incumbent utility companies offering new solutions to their clients, or new entrants providing new technologies and services to the market. Renewable energy needs to compete with existing fossil based central solutions. In a highly regulated sector, rules for both the fossil and renewable energy worlds determine the space for new business. At Roland Berger we holistically develop new business models in close cooperation with the client, from the concept, to the business and financial plan. Based on the action plan and roadmap, we then support implementation. Our clients have set up a new business in less than a year. Your customers can now benefit from a new solar PV installation concept, innovative, decentralized energy solutions or supply of its premises based on 100 percent renewable energy. Our expertise spans the entire renewables value chain and technologies. We have also successfully delivered incentive framework reforms to governments and public entities.

• Our experts Klaus Müller

Renewable energy with its zero marginal costs is leading to low margins for traditional power plants and low load hours. Decreasing demand because of energy efficiency and strong competition with price pressure in retail markets is increasing the burden for ailing utility companies. Some companies have to right size their operations to return to viable business.

At Roland Berger we pursue a holistic approach in restructuring cases. We conduct a strategic reorientation and lead an operational and financial restructuring, closely monitoring the operational business to ensure continuity. We identify the healthy core and implement solutions for a continuously sustainable business model. Building on our experience, we can conduct a complete restructuring in 12 to 15 months, reducing the cost base by up to 30 percent.

• Our experts Torsten Henzelmann and Martin Hoyer

Large projects are often characterized by delays and cost overruns. A typical project can be 55 percent more expensive than projected, equating to billions. Large scale innovation and infrastructure projects bring challenges requiring a specific program management approach.

Roland Berger delivers this with a holistic perspective. We include all aspects of the project - organization, processes, technical, legal, finance, risk management and communication. We typically proceed in three steps. First, we stabilize the organization and establish a core team. Secondly, we restructure the organization and establish a framework for delivery. Finally, we oversee and manage implementation. This approach enables our clients to build projects within the designated time frame. A cost reduction of only 10 percent would capture between EUR 3 and 7.5 trillion in savings over the next 15 years.

• Our experts Heiko Ammermann and David Frans

Under changing economic conditions, gas prices in long term contracts can deviate from those observed on wholesale markets. Decoupling of oil and gas prices in Europe and the advent of new gas supplies in Asia has led to a rise in disputes over prices.

Roland Berger provides an external analysis of the fair price, delivering arguments for negotiation and even offering support in arbitration tribunals. In our economic analyses, we assess the contract marketability and profitability over time. With more than 15 cases in the last five years, we have obtained a deep understanding of arbitrations, which allows us to properly manage the process and anticipate opponent's arguments. We have won all large litigation cases, claiming back more than EUR 1.5 billion for our clients.

• Our expert Denis Depoux

Fluctuating feedstock prices, more efficient production technologies, and a shift in the gravity of global market demand has shaken the competitive position of refineries worldwide. European refineries face difficulties competing against the US and Middle East. A performance optimization of the refinery would enable it to stay in the market for the long-run. We can set up a performance improvement program in a 12 week period. In the first phase of one to two weeks, we analyze the strengths and weaknesses of the plant and identify areas of performance potential. In the second phase of two to three weeks, we confirm the size of the performance gap, establish the levers to close it and set targets and KPIs. In the third phase of five to eight weeks, the concrete performance projects are defined in close cooperation with the employees. In these projects, our consultants rely on our tools and databases, like the design to cost approach, maintenance benchmarking, personnel efficiency analyses and operational expenditures reduction database. On average, we have saved 20 percent of the OPEX cost base in our projects.

• Our experts Walter Pfeiffer and Eduardo Neto

Declining end-user demand leading to lower volumes puts pressure on distribution and transmission companies. Regulatory pressure exacerbates the need to reduce costs.

With its accelerated zero based budget approach, Roland Berger can realise cost savings of 10-25% within 6-24 months. The continuous improvement approach maintains these and realises additional savings in the long run. In a typical 12-week AZBB project we map the costs, design levers, validate them and put them in action plans – Focusing on all cost types, including FTE sizing and external procurement (OPEX & CAPEX). Continuous Improvement creates a performance culture. In five recent projects we have realised savings between 19 and 40%.

Many energy companies face competitive environments. Asset disposal plans and large performance plans are put in place, while procurement as a lever to improve performance tends to be overlooked.

In our experience, optimization of a client's procurement program can save between 10 and 20 percent of total spends. We can develop a strategy that goes beyond price savings. Applying advanced optimization levers, which are not only cheaper, but also more effective. We also develop a true approach per category. We learn alongside the client, increasing client involvement with each new procurement category wave. We also help design an organization that is fit for the new role of procurement in energy companies.

Beginning with the simple buying and selling of energy, utility companies offer services and products that become increasingly sophisticated. They have set up fully fledged portfolio management and trading activities in order to be active on organized and over the counter markets, optimizing their physical and financial exposure. Managing risks has become mandatory, bringing about the need for sound frameworks. "Trading" helps utilities maximize the value of their various activities using an integrated approach. Other parts of the utility can benefit too, such as customer pricing, flexible monetization and the integration of renewables in the wholesale market.

Roland Berger understands the complexities of pricing, sourcing, portfolio management, trading, and risk management. We have supported companies to develop unregulated offerings or improve their pricing, set-up or expand their trading activities, assess and redesign risk management frameworks and organizations including the concrete development of risk policies and indicators, and devised models to create synergies with other business activities.

New rules and regulations for the energy industry, liberalization and unbundling will lead to a shift in industry structure. Large M&A deals may take place. When an industry is consolidated, companies extend their business across national borders or enter new areas. The new company must increase its value and realize the merger logic.

At Roland Berger, we support you in this journey. A sound process starts the PMI before the deal closure and typically runs for more than a year. We develop a new business plan for the new company, setting ambitious, but realistic synergy targets. We operate a disciplined project management office, overviewing and steering all integration activities. It is critical to set-up a system enabling full overview/control over integration measures, progress and effects. Our databases on synergy levers help pinpoint opportunities. We also prepare the cultural integration and change management concept. Experience in cross-border mergers is crucial. In the last 10 years, we have supported 20 PMI projects.

• Our expert Arnoud van der Slot

Energy companies typically spend only 0.4 percent of their revenues on innovation, which is a tenth of what the average industrial company spends on research and development. Liberalization and market opening in the late 1990s transformed European Utilities R&D into a cost regulated function. However, new research, development and innovation issues have arisen along the energy and utilities value chain. In the midterm research, development, and innovation are credible levers to restore competitiveness.

New business opportunities and the rise of renewable energy raise questions for energy companies on what activities to conduct and which to outsource. Answering these questions, we support these companies in setting their innovation strategy and developing their innovation portfolio management tools. We support the change of mindset needed in order to be able to participate in an industry of changing surroundings.

• Our experts Vladimir Preveden and Didier Tshidimba

The energy and utilities sector is lagging behind in digital transformation. In other industries, old business models are not viable anymore, e.g. in retail, media and travel. With the Terra Numerata initiative, our ambition is to help European champions become digital market leaders rather than followers. Digital transformation increases efficiency, creates new 'digital' business opportunities, and encourages a more customer centric approach.

We have supported companies in drafting their digital agenda and sequential development implementation of detailed business cases to realize the agenda. We have set up a digital unit for a large utility to enable the roll out of internal and external innovative digital services. For a large oil and gas company, we set up a startup factory concept - an approach to evaluate and build successful business models, delivering three new digital businesses in the first year. Digital has delivered our clients revenues exceeding EUR 10 million in the first two years.

• Our experts Paolo Massardi and Raphael Cariglio