Trading risk transformation

The energy transition and how utilities can respond

Brian O'Neal

Brian O'Neal

Principal Advisory, Supply Chain & Operations, KPMG US

+1 713-319-3865

Patrick Wagner

Patrick Wagner

Director Advisory, C&O Commercial, KPMG US

+1 713-319-2906

A convergence of factors is driving change in the wholesale energy markets. New, efficient-generation technologies combined with a shift toward clean energy preferences are dramatically changing the portfolio composition of supply and generation assets. What is taking shape is a new market climate in which it is increasingly difficult to rely on historical practices to manage fuel supply and generation output. This, coupled with more volatile and extreme weather patterns and new and evolving clean energy technologies, is driving structural changes in the energy landscape.

Accelerating these changes are mandates to invest in clean energy asset builds and acquisitions intended to deliver on corporate climate goals and environmental, social, and governance (ESG) objectives. Further complexity and decentralization are coming from rooftop solar, distributed energy resources, and emerging microgrid and battery storage.

Supporting more complex transactions and approaches to drive margin and reduce costs will require utilities to revisit their supply, trading, and risk management operating models. The risk of disallowance is likely to be greater for utilities that do not proactively respond to these paradigm changes. Customer advocates and utility commissions will not allow utilities to ignore their fiduciary duty to consumers.

Download our paper to learn more about the energy transition and how utilities can respond.