Energy Execs Focus on New Growth Strategies

HOUSTON — Fluctuating commodity pricing and a volatile environment have pushed energy executives to focus on new growth strategies and to implement significant changes to their business models, according to the results of the 2015 Energy Industry Outlook Survey conducted by KPMG, an international audit, tax and advisory firm.

KPMG announced the findings on May 20 at its global energy conference in Houston.

KPMG’s annual energy survey, which polled nearly 200 senior energy executives in the U.S., found that more than half of executives (56 percent) are in the process of planning changes to their business models over the next two years. Further, when asked to cite their top organizational priorities, execs ranked the top three as: growth, reducing costs and increasing cash flows.

"In order to achieve growth in this challenging environment, energy companies need to be agile and take a 360-degree view of their businesses, which will require many to make significant changes," said John Kunasek, national sector leader for energy and natural resources for KPMG, in a statement. "While managing costs is still important, these companies also need to identify ways to drive growth and innovation across their organizations."

The results of the 2015 Outlook Survey suggest that the power and utilities sector is focused on grid resilience and distributed energy supply growth, increasing cost pressures, and a challenging regulatory environment. Almost 70 percent of execs surveyed indicate they see a significant move away from the traditional vertically integrated regulated utility towards a more unbundled and distributed energy supply market future.

Generating growth is still a top priority for industry executives, with 44 percent pointing to organic growth as one of the top strategic priorities over the next two years. Additionally, 57 percent of execs point to deploying a strategic planning process to respond to accelerating market changes over the next three to five years.

The outlook for hiring remains strong in power and utilities. More than 60 percent of respondents indicate they will be increasing headcount over the next two years, with 21 percent indicating an increase in headcount of more than 10 percent.

"Emerging more efficient distributed energy supplies such as solar combined with the advancement of energy storage technologies is accelerating the need for incumbent utilities to relook at their business models," said Kunasek. "There will always be a need for some form of an electric delivery backbone but we really need to look at the investments the industry needs to make and updates to the traditional regulatory model to enhance an existing delivery system that better enables these new markets to flourish."