Ninety percent of energy companies from the EMEA and Asia-Pacific regions are actively seeking a smart energy technology joint venture or acquisition, said a report by global 100 law firm Pinsent Mason.
Energy technology bolt-ons will underpin the future of the global energy industry as companies respond to the seismic shift in energy distribution and supply, consumer demand and to capitalise on the smart energy revolution, the research said.
The appetite for JVs varies by region: almost half (49 per cent) of energy companies in Asia Pacific are enthusiastic about partnerships, compared with a third (33 per cent) in EMEA.
Pinsent Masons says lucrative opportunities in Europe and Asia could attract Middle Eastern investment with 85 per cent of respondents naming Germany, China and the UK the top three destinations for their next smart energy investment. Furthermore, respondents highlighted the Nordics, North America and Western Europe as the regions with the most growth potential for smart energy initiatives.
The findings indicate investors and energy companies are prioritising smart meters, new methods of harnessing surplus power and in-house development of data analytics technology within the next two years while cloud management systems and virtual power plants will see a surge of investment over the next six years.
While the lack of competitive electricity markets is stifling innovation in the Middle East, Pinsent Masons says Middle East-wide energy market collaboration and reform is crucial to the dismantling of government subsidies to kick start smart energy projects across the GCC Sunbelt.
Sachin Kerur, partner and head of Pinsent Masons Middle East, sees opportunities opening up in the region: “We’re seeing a clear steer from the government, with policies such as the Dubai Clean Energy Strategy 2050 leading the way. Demographic drivers, growing demand for energy and the fiscal challenge of low oil prices will all contribute to a shift in gear for the Middle Eastern energy industry.
"For Middle Eastern investors and energy companies, the message is clear - innovation and dynamism will be the key to unlocking the smart energy revolution in the region. While pursuing greenfield opportunities on the ground is crucial, cash rich investors and acquisitive energy companies have an opportunity to reap the rewards of innovative new technologies across China, Germany and the UK."
On a global level, 62 per cent of energy companies say they will not opt for in-house development of smart energy solutions due to high start-up costs and a lack of expertise but investors favour joint ventures or acquisitions. The survey shows that the biggest investment driver for investors (46 per cent) and energy companies (30 per cent) is access to new technology, offering first-mover advantage, improved profitability, end-customer satisfaction and enhanced brand image.
Energy partner at Pinsent Masons, Ian McCarlie, said: "Joint ventures and acquisitions are the key to this revolution if utilities are to play a role in the future of the energy industry, maintain security of supply and meet consumer demand in a highly competitive market.
“What we’re seeing is energy companies stepping up to the plate and embracing the brave new world of energy supply. At the heart of this revolution, consumer choice and efficiency are of paramount importance. Bolting on technology and pooling resources is the most effective way to respond to new consumer trends and patterns of energy consumption.”