Utilities companies are pursuing clean energy to achieve net-zero targets

Capgemini partnered with Snider Consulting, a program of Venture Lab at the University of Pennsylvania over the past year to investigate the ongoing energy transition of utility-sector leaders. The joint effort concludes that companies will be required to pursue innovative measures to provide the public with basic amenities in a carbon-neutral future. This requires adopting emerging technologies to help standardize their reporting practices and provide cleaner energy.

Progress is being made in pursuit of carbon neutrality as utilities players are committing to aggressive climate targets and developing new technologies to support their energy transitions. This is necessary as they face pressure from all fronts. Government regulation and new policies call for increased reporting and disclosure of carbon emissions, as in the recent SEC Climate Disclosure Policy. Demand from investors and other stakeholders to enact initiatives that have a lasting impact will only continue to increase. Utilities companies must manage the pressure from these outside forces, as well as overcome tactical challenges to meet their ambitious net-zero goals. Companies are responding by exploring new technologies, investing in clean energy, and bolstering their renewable portfolios.

The growth of capacity to generate power from renewable sources is accelerating, but energy systems based on wind and solar – highly touted natural sources – would be complex and could prove to be unsustainable in the long term. To rely on these energy sources to achieve net-zero goals requires the development of interconnected storage, transmission, transportation, backup, and demand-management infrastructure.

As shown above, green energy technologies are more material-intensive than conventional options. The additional infrastructure required to integrate higher shares of wind and solar and meet the energy demands of modern society also introduce large additional material requirements. And while variable renewable energy sources present challenges, hydrogen could provide more reliable pathways for utilities companies to achieve their net-zero targets and still meet their customers’ energy demands.

Hydrogen is a promising option as it has the potential to fill gaps that other natural sources and electric energy cannot handle. Utilities companies also recognize the value of hydrogen and are making significant investments in this cleaner energy source. And as the demand for green alternatives increases, this trend will continue.

“Hydrogen is as close to a holy grail as anything the energy majors have before them. It is going to get competitive by 2030-2040, and it’s starting to make sense for companies to build out an infrastructure that would support a hydrogen-based energy economy.”

Mark Alan Hughes
Founding Director, Kleinman Center for Energy Policy

The world is reaching an inflection point in the acceleration of hydrogen technology, as it enables large-scale renewables integration and power generation. And because hydrogen represents a link between multiple energy sources and industrial applications, it has the potential to augment or replace current investments and production methods. Morgan Stanley recently forecasted that the hydrogen market will reach a $600 billion global valuation by 2050, signaling hydrogen’s role in the energy transition.

SoCal Gas, for example, is committed to helping shape the future with green hydrogen as the company pursues the development of the Angeles Link. This endeavor would be the nation’s most extensive green hydrogen infrastructure system, capable of delivering clean, reliable energy to the entirety of Los Angeles. The proposed Angeles Link would also significantly decrease demand for natural gas, diesel, and other fossil fuels in the LA basin, helping accelerate the climate and clean-air goals of California and the nation. As contemplated, the Angeles Link would deliver green hydrogen in an amount equivalent to almost 25 percent of the natural gas SoCalGas delivers today. Keith Malone, California Fuel Cell Partnership spokesperson, explains “SoCalGas is one of the most aggressive natural gas companies not only here in the U.S. but around the world in terms of their pursuit of renewable hydrogen.” With Angeles Link, SoCal gas aims to become an industry leader in hydrogen.

Clean technology startups are also entering the utilities category with innovations that could help shape the future of net zero. Ocean Renewable Power Company, recognized as one of 13 CleanTech Companies to Watch in 2022 by Nexus PMG, has developed a hydrogen power system that uses river and tidal currents to generate emission-free electricity. Because it can be integrated with other renewable energy sources through smart-grid technology to overcome disruptions in power supply, this hydrogen system represents a solution to the variable renewable energy issue. Another emerging hydrogen technology company, Monolith, is pioneering a zero-emission hydrogen production method, using methane pyrolysis to operate the world’s largest clean-hydrogen production facility. As Gawain Lau, Monolith’s Senior Process Engineer, explains, “Monolith is one of the few self-sustaining business models in clean tech and will play a large role in the future of hydrogen production.” To increase their likelihood of reaching carbon neutrality, utilities companies can explore long-term partnerships with innovative clean-technology companies, or consider integrating emerging technology into their net-zero plans.

Capgemini is well positioned to help companies achieve their net-zero goals.