British energy sector faces unprecedented City-style ‘Big Bang’ transformation, warns Wood Group chief

Ian Marchant
Ian Marchant

EXCLUSIVE By Scottish Energy News

The former chief executive of a Scottish-based UK Big Six energy provider has warned that the British energy and power industry is at a major tipping point and is now facing one of the most significant transformations in its history.

For the industry to meet future global demand companies will need to change business models and become more disruptive in their approach to developing new technologies, according to Ian Marchant, Chairman of the Wood Group oil-to-renewables conglomerate.

Comparing the challenge facing the sector with the transformation of the IT and Telecoms industry since the 1980s, Marchant, who is also Chief Executive of the Edinburgh-based Dunelm Energy consultancy, says the scale of change within the energy sector is unprecedented and needs to be addressed quickly.

Industry observers – including BP’s chief economist Spencer Dale –  have noted that key disrupters and trends include:

  • BPVs (battery powered vehicles); if rolled-out mass market, they will depress oil prices, radically re-structure road-use and infrastructure, drive through huge demand for renewable energies – and leaving a gaping fiscal hole in government coffers where oil and petrol taxes used to be
  • Tidal and marine energy; another sector where developments in Scotland are leading the world (although they are not Scottish energy companies)
  • Solar power; even in Scotland, and particularly along The Costa-Tay, where Dundee and environs along the River Tay to Perth is home one of the highest solar yield locations in the UK (despite barely being mentioned in the draft new Scottish Energy Strategy)
  • Major oil and gas companies buying, or developing their own BPVs and associated renewable energy technologies –  see also today’s report; INEOS to build the ‘new’ Land Rover’
  • Hydrogen-fuel; for low-car-bon vehicles and also for domestic heating

Marchant, who spent 10 years as chief executive of the Perth-based utility company, SSE, is set to tell a UK energy conference next month: 

“The energy and power industry is at a major tipping point where the business models, technologies and procurement patterns of the past will not prevail in the future.

“Energy companies and their suppliers need to be aware of the enormous change facing the sector and face being left behind if they don’t react quickly.

“Such is the size of the energy industry the scale of change required is truly historic. However, the inertia of the sector and its attachment to traditional practices will hamper its future.

“The pace of change in the technology terms is extraordinary and akin to what happened in the IT and Telecoms sector since the 1980s. The explosion of evolving technology has changed the face of that industry and the winners are those that have embraced and led the change. The same applies to the energy sector.”

“The supply chain has a key role to play in this as they have to evolve a little quicker than the rest of the industry to anticipate and drive the evolution of how the sector operates.

“But I am confident there are enough disruptors in the industry to deliver the change required and ensure a positive and balanced energy future.”

 

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