Survey: 60% of US energy executives expect 50% renewables by 2045

Dive Brief:

A survey of energy executives conducted by KPMG Global Energy Institute finds a power sector in a continued state of change, with executives focused on new business models and technologies while also dealing with the consequences of sustained lower commodity prices.
The firm's 2016 Energy Business Outlook finds 94% of energy executives believe volatility in commodity pricing coupled with regulatory changes will require "significant changes to their business models" within the next five years.
About two-thirds of those surveyed point to the growth of renewable energy as a top disruptive trend, and more than 60% say the U.S. will have a renewable footprint of 50% by 2045 or sooner.

Dive Insight:

KPMG's survey of 150 senior energy executives in the United States shows a focus on change across the energy sector, driven by new technologies and accelerated by commodity prices many believe will remain depressed in the near-term.

"The prolonged commodity price situation, technological advances and other disruptive forces have been shaking up the energy industry for some time now, creating challenges and opportunities for companies across all energy segments and operational activities," Regina Mayor, national sector leader for energy, natural resources and chemicals for KPMG, said in a statement. "Companies have seen that the way to thrive and remain competitive is by ensuring that their organizations are continually making growth, and a focus on capital spending efficiency, a strategic priority."

Executives are predicting strong growth in renewable energy, with 62% believing the United States will get half of its power from clean energy sources by 2045 of before. And in the rapidly-changing utility sector, 41% of executives say they expect "significant change" in utility business models, moving towards a significantly more distributed, unbundled operating model.

"Despite the significant changes that have affected utilities, fundamental transformation is on the horizon," said Mayor. "While the models may vary based on regional demands and regulatory requirements, it is clear that the industry will need to structurally evolve to adapt to new technologies and market participants."

92% of respondents expected natural gas prices to remain below $3/MMBtu for the remainder of this year. Almost 40% of those surveyed believed that Brent Crude oil prices will stabilize to a "reasonable level" by spring of 2017, though more than a quarter believe this will happen by the end of 2016.

"This new 'lower for longer' commodity pricing environment has made it necessary for energy executives to devise new ways get access to capital to fund short- and long-term strategic activities," said Mayor. "For this reason, companies are taking necessary actions to identify areas of greater efficiency and looking at organic and inorganic growth strategies."

More than 44% of executives say they will be developing new growth strategies over the next two years.

Expect the trend of acquisitions in the sector to continue as well. Some 92% of executives say they believe they will be involved in a merger or acquisition in the next two years, though roughly 40% say acquiring assets versus an entire company would be the most strategic approach. Among oil and gas executives, more than half believe restructuring or bankruptcy opportunities will be the primary driver of acquisition activity.