Low carbon, high profile

Alastair Pickering warns energy utilities to prepare for consumer and investor backlash as the industry is decarbonised.

The energy market is about to undergo the biggest transformation in its history, shifting from a hydrocarbon-based generation model to a low-carbon alternative. These changes will be complex and disruptive, which means the potential for reputational damage will increase.

From a consumer point of view, there are a number of fronts that companies will have to keep an eye on. The deployment of new technologies could see the rise of new strains of environmental activism. New nuclear is an obvious protest target, as is the new (and controversial) industry of shale gas extraction.

Last month, shale driller Cuadrilla‘s meeting in Blackpool to announce it had found 200 trillion cubic feet of gas underground in Lancashire was attended by a small protest organised by Campaign Against Climate Change. Small for now, but as the public becomes more aware of this technology, and it becomes more widespread, protests against it are likely to grow.

There is a clear danger of a backlash from smart metering too. Protests inevitably lead to negative press and, if dealt with badly, can trigger a serious threat to corporate reputation. Shell‘s handling of its argument with Greenpeace in the 1990s over the disposal of the Brent Spar oil platform still causes shudders in industry boardrooms.

There is also a risk to the reliability of energy supply across the grid, in part due to the intermittent nature of some renewable generation such as wind, which will become more challenging as offshore wind increases its share of the generation mix, as well as the disruptive nature of the huge infrastructure changes that will be required to deliver low-carbon energy generation.

Combine these developments with what look likely to be substantial increases in consumer bills to pay for them, and you have the explosive mix of a potentially worse service that customers will end up having to pay more for. It does not matter how much education has been done on the (valid) reasons why the changes are being made, this will not play well with consumer groups and will have PR departments on red alert as they prepare to minimise the damage to brands and reputations.

This is part of the article written by Alastair Pickering, Research and Operations Director at Alva and released in full on Utility Week.