Paths to Power: Big Oils and Utilities’ Diverging Strategies for Energy Convergence
The energy transition may require up to US$30 trillion investments by 2040 in clean energy infrastructure to limit global warming. In this report, we look at the central and different roles of Big Oils and Utilities in enabling this transition. Big Oils will likely focus on power retail, trading and unregulated generation, alongside biofuels, gas, petrochemicals and carbon capture; Utilities will likely focus on high-growth regulated power generation and power networks, enhancing returns through financial leverage. Big Oils' experience in global gas chains, with their emergence as global LNG market makers, prepares them for their role in the energy transition. European Oils already spend c.50% of their capex on low carbon activities, and can enable power supply management in increasingly complex and de-regulated power markets. Utilities have the opportunity to participate in one of history’s largest infrastructure investments, with material upside to current valuation.