World Energy Markets Observatory

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The 23rd edition of Capgemini’s World Energy Markets Observatory pays special attention to effective, yet practical, strategies for accelerating energy transition efforts on both a global and regional level. The report reveals a world struggling to balance the critical need to accelerate energy transition while maintaining energy affordability.

In this report, we review how advances in enabling technologies, new investments, and industry transformation have the potential to help mitigate the effects of climate change – and the steps that must be taken to turn possibility into impact.

Key findings include:

  • Electricity spot markets are at record high levels, linked to sustained demand, lower generation capacity margins, high gas prices, and, in Europe, high carbon prices.
  • Supply of renewable-based electricity has increased while renewable costs continued to decrease in 2020: both solar and wind power generation capacities rose in 2020, representing 10% of the electricity generation market. The downward cost trend could reverse in 2021 and in the following years, as critical metal, equipment, and transportation prices as well as interest rates increase.
  • Growing momentum around green hydrogen, which has the potential to decarbonize an additional 15% of the world economy. Green hydrogen is costly, around three times more expensive than fossil-based hydrogen; however, decreasing renewable electricity and electrolyser costs could lead towards parity by 2030.
  • Competition in the electricity and gas retail markets has largely recovered early 2021, however, presently, high energy prices are triggering consolidations. Whilst utilities demonstrated financial resilience in 2020, oil and gas players were more severely hit, though many have now recovered thanks to higher demand and prices for oil and gas. Stakeholders pressure on oil and gas majors has accelerated their diversification towards electricity, renewables and e-mobility and reinforced their carbon neutrality commitments, particularly for European International Oil Companies (IOCs).
  • Energy and utilities players are moving quickly to decarbonize and harness the current energy transition to develop new models and reinvent themselves in valuable ways. By digitizing and embracing low-carbon technologies. Many are attempting to find the right balance between meeting stakeholders’ expectations and ensuring business transformation in competitive markets.
  • Whilst the appeal for clean technologies, essential to energy transition, begins to intensify, it is crucial to remember that achieving this means not compromising on security of energy supplies or energy affordability.

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Featured Testimonials

Colette Lewiner, Energy and Utilities Senior Advisor at Capgemini

“Our analysis underscores the importance not just of undertaking steps to address climate change, but our ability to accurately measure the effect of those actions. To that end, this year’s World Energy Markets Observatory highlights how energy organizations can leverage accurate, timely, high-quality data and undisputable scientific methods to maximize the value and guarantee the return on every dollar invested.”

Philippe Vié, Group Vice-President Energy and Utilities sector at Capgemini

“In this year’s World Energy Markets Observatory, we see the need to maintain energy affordability while accelerating energy transition efforts. Emerging technologies and new use cases across the energy value chain, including green hydrogen, CCUS, storage, and e-mobility, will play a critical role in helping the world achieve a net zero future.”

Featured Experts

James Forrest

As a global leader in our Energy and Utilities business, I help my clients with major business transformations involving smart grid, IOT, the reform of gas and electricity markets, major software and infrastructure changes and use of machine learning and artificial intelligence to drive significant business performance improvement.

Philippe Vié

Philippe Vié is the Global Energy, Utilities and Chemicals Sector Leader at Capgemini, and has been in the industry for over 25 years leading transformation projects globally.