Where future opportunities lie for energy companies

Dusseldorf Sustainable energy supply is rapidly gaining importance for European companies. The market for energy solutions is expected to quadruple by 2035. This is the result of a previously unpublished study by the strategy consultancy PwC Strategy&, which is available exclusively to the Handelsblatt. According to the forecast, the market value for energy solutions between companies (B2B) will increase from the current 25 billion euros to 100 billion euros by 2035.

The pressure on energy companies to act has never been as great as it is now. The war in Ukraine did increase demand for oil and gas in the short term. However, the conflict shows how dangerous dependence on fossil fuels is.

For energy companies, this means that the business with fossil raw materials should be a thing of the past in the foreseeable future. If you want to survive, you need new business models.

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But how does the transformation succeed? The Handelsblatt asked management consultants how large corporations best approach new business concepts and how they can benefit from agile start-ups. In addition, young entrepreneurs report on how they work together with established companies in important future fields.

Cozero: save CO2 with software support

One thing is clear: External circumstances as well as investors and customers are demanding that companies become climate-friendly quickly. Axel von Perfall, Director at Strategy& and one of the authors of the study, says: “Customers are increasingly informed and more willing to compare. The brand is no longer everything.” Companies are under increasing pressure to implement cost-efficient and CO2-neutral energy solutions.

Accordingly, numerous companies are now specifying specific target years by which they want to be climate-neutral. But there’s a catch: It’s complicated to reliably determine how high your own CO2 footprint is and which measures reduce it by how much.

This topic can become an important future field for the energy companies. The Berlin start-up Cozero is already active here. Founder Helen Tacke previously worked for an early-stage investor and discovered the gap in the market there: “I realized that many companies manually record their emissions in Excel lists,” she says. Cozero has therefore developed a digital tool that balances the emissions of companies.

Cozero founder Helen Tacke

“It has become clear to me that many companies manually record their emissions in Excel spreadsheets.”

(Photo: Cozero)

Tacke and her co-founders Fabian Schwarzer and Tiago Taveira are young and want to break up existing structures. However, her approach fits her business background. “Our software helps companies to plan and budget for their decarbonization path,” says Tacke.

Cozero determines a so-called return on climate investment for the company: “How much CO2 reduction does a measure such as switching to sustainable plastic bring per euro invested?” says Tacke. The software thus also answers the question: “How much climate protection can I afford?”

The founders set up their company with a similar claim. Instead of collecting a lot of money from investors early on like other start-ups, Cozero immediately looked for customers to support itself financially. The business model is similar to that of SAP – customers pay monthly or quarterly for licenses to use software that enables accurate accounting, just above CO2 emissions.

The Cozero software is now used by 32 customers in over 50 countries. The insurer Gothaer is also one of them. With the Cozero software, it enables its customers from medium-sized companies to have an overview of their CO2 emissions. Now that a solid basis has been created, the Cozero founders are also considering further expansion. Tacke says: “Now we have reached a point where we think a round of financing makes sense.”

GridX: decentralized energy solutions

According to the study, investments in innovative ideas are another central factor in the transformation of the energy industry. The study states: “We consider mergers and acquisitions to be essential for companies that want to quickly expand their presence in the energy solutions market.”

In 2021 there were 70 percent more acquisitions in the field of energy solutions than in the previous year. In the next twelve to 24 months, the authors expect a further strong increase in such activities. Large energy suppliers are particularly active in mergers and acquisitions, including, for example, the French groups Électricité de France (EDF) and Engie and the German energy company Eon.

“Oil and gas companies are strategically investing in energy services, such as charging electric cars, to move their business model away from fossil fuels,” the study said. This shows that only those who invest wisely will stay in the game.

For this reason, Eon took over the majority of the Aachen start-up GridX last autumn. The company develops digital platform solutions that connect, control and optimize decentralized energy resources such as electric cars.

In concrete terms, this can mean coordinating the charging process of several electric cars in a parking garage. If the network threatens to be overloaded, the charging power is dimmed down by software. In case of doubt, this is not a problem, since the cars are often in the parking lot longer than is necessary for the fastest possible charging.

However, GridX founder David Balensiefen only sees the orientation of corporations such as Eon towards such new solutions as a first step. “We are still at the very beginning of the transformation in the energy market. The next few years will be crucial for many companies,” he says.

GridX boss David Balensiefen

“We are still at the very beginning of the transformation in the energy market. The next few years will be crucial for many companies.”

(Photo: Marc-Steffen Unger for Handelsblatt)

Balensiefen has a clear vision of what a large energy company will have to do in the future: “A company that wants to be a leading energy supplier in ten years has to sell and operate energy storage, photovoltaic systems and charging infrastructure,” he says.

Tobias Gehlhaar, Managing Director of Basic Industries, Energy and Utilities at the management consultancy Accenture, agrees that established energy companies need to position themselves much more broadly. He sees the key strength of large corporations in the many customer contacts they have. He says: “For the big companies, it’s about monetizing their access to customers anew.”

A company’s product range can grow with many facets and related services. As an example, he cites the many products from different manufacturers that can be bought on the Amazon platform. “This is how large energy suppliers could do it in the future: Suppliers, craftsmen and all services related to the core energy would have to be digitally integrated,” says Gehlhaar.

Voltfang: Batteries from electric cars as home storage

According to the study by PWC Strategy&, one of the most important areas that energy companies will have to develop in the future is charging electric vehicles for corporate customers. According to the study, this area is likely to grow by 20 to 30 percent per year.

Related to this is a technology in which another start-up from Aachen has specialized. Voltfang has partnerships with five battery and vehicle manufacturers that supply used electric car batteries. The people from Aachen use it to make home storage systems for private individuals or companies with a photovoltaic system.

They have already supplied hotels and bakeries with the batteries. Founder David Oudsandji says: “Many graduates of RWTH Aachen develop software solutions for the environment. But hardware is also needed to solve the climate problems.”

>> Read also: Volkswagen and Eon turn electric cars into electricity storage

He received approval from an Aachen graduate who had developed a software solution: GridX boss Balensiefen and his co-founder Andreas Booke invested privately in Voltfang. “With a delay of a few years, the normal ramp-up of electric cars also results in an enormous number of discarded batteries,” says Balensiefen. These may no longer be suitable for mobility, but they are a cheap and sustainable alternative for industrial and commercial applications.

Management consultant Gehlhaar agrees: “Recycling is a huge topic. The central question is always: How do I get to the garbage? For this specific example, scaling through cooperation with automotive suppliers like Bosch could be an approach.”

Voltfang founder Oudsandij is not entirely averse to this. Companies like Bosch, car manufacturers like VW, BMW and Toyota or energy storage companies are potential buyers. “Since we will be running another round of financing this year, the entry of one of these companies is currently an issue for us,” says Oudsandji.

More: These start-ups promise greater energy efficiency for homeowners.

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