Swiss utilities take on the continuing market challenges
Swiss utilities, a key pillar of Swiss economic success, providing reliable and largely CO2 free electricity are facing a challenging market environment: low wholesale prices, changing regulation and new technologies are only a few topics which have to be addressed by the energy companies. Deloitte can advise and implement solutions to navigate and innovate through these challenges.
Low wholesale prices
Low wholesale electricity prices remain below generation costs for nearly all Swiss generation assets. The low profitability of generation asset owners is leading to permanent cost cutting, refinancing and the sale of non-core assets. Certain energy companies are already facing a separation of their business units in two companies in order to position attractive business domains for new investors.
In order to escape losses resulting from the sale of electricity generated by traditional power stations on the wholesale market, energy companies are looking to increase the capital allocation to energy services and regulated power generation (where subsidies in technologies such as wind and PV are still available in certain countries).
Changing regulations – liberalisation and the digital utility
Given the latest statement of the Swiss Federal Office of Energy (SFOE), full liberalisation will not be introduced before 2020, but in the medium term. As in other countries this will lead to a reduction in power prices for retail customers. The decreasing margins in the liberalised Swiss electricity wholesale market (customers in Switzerland with a yearly consumption of at least 100 MWh can opt into the free market) provide an indication of the impact of a complete electricity market liberalisation. Upon liberalisation we expect a rapid dash to acquire a sufficient customer base. Those utilities unable to acquire sufficient customer base will face slow customer erosion. A clear strategy and market positioning are necessary to counteract this erosion - the preparations should already be started today.
Changing regulations – financial market and tax changes
Trading activities progressively become more subject to financial market regulation (e.g. MIFID II, finfrag, etc.). This is combined with new tax legislation such as BEPS.
The entry of distributed generation and storage, combined with the possibility of the “internet of things” have caused a revolutionary spirit in the energy sector.
Energy and grid companies need to adapt to the new challenge by evaluating and developing new business models around decentralised generation, prosumer energy services and the connected home. The shift of power generation from high voltage into distribution grids and additional storage possibilities also create new demands in grid dispatching (smart grid) and a higher vulnerability for cyber-attacks.
How can Deloitte help?
As Deloitte we take IT and digitalisation seriously. We not only advise, we implement:
- IT-enabled cost reductions such as automation of the workplace.
- your digital transformation using the technologies we have implemented in other liberalised markets
- Document management and tablet workplace solutions to enable energy service teams to speed up order to cash processes.
- Deloitte’s new software enabled grid management solution provides grid owners more predictive maintenance.
- New business models and the digital customer experience (web, mobile, social etc…).
Deloitte’s specialised cyber experts can help protect your critical assets and trading platforms from attack.
Our financial advisory teams can manage or support your M&A processes, both in Switzerland and abroad. For example by leveraging our wind expertise in Denmark and Germany.
Using our know-how from our audit expertise and the financial market industry we can support you in understanding and implementing new financial regulatory, accounting, tax and compliance requirements. We also support utilities adopt to new tax regulation such as BEPS and CTRIII.
Digitalisation offers energy companies the possibilities to:
- Be digital: Digital transformation of the company as for example a cost reduction through automatisation of services in the retail market; and
- Go digital: Digitalisation of the customer interface and customer processes (e.g. the minimisation of the paper administration and speed up the billing and cash collection processes)
Deloitte is one of the leading suppliers for digital transformation projects – we are supporting our customers during the conception, development and implementation such projects.
Contact our expert Rolf Bruegger for more information
Predictive asset maintenance
Switzerland carries ageing grid infrastructure in water, electricity, gas and district heating sectors which needs increasing levels of maintenance.
Deloitte helps you to implement tailor-made asset management processes according to the international standard PAS 55. Furthermore we help you in the handling of the important data especially from the ERP and GIS system.
With the knowledge from our global experts we are currently developing an efficient asset management software. In order to find an optimal and efficient solution for you, we are glad to integrate your individual requirements.
Contact our expert Willi Rohr for more information
Cyber security in energy and energy trading
Deloitte can support companies and organisations in order to reach a high cyber security level. Our services cover the whole cyber security lifecycle – strategy, architecture and implementation, threat intelligence and security operations up to incident management. Our customers in the energy sector leverage our global experience along the whole value chain, including generation, grid, “internet of things” and trading.
Contact our expert Klaus Julisch for more information
Support with regulatory changes
We can support you in regulatory questions in order maintaining regulatory compliance also during changing general conditions (e.g. REMIT, EMIR, MIFID II, FinfraG).
Contact our expert Stephan Welti for more information
Valuation and modelling
We can provide valuations and fairness opinions on energy investments for example to board’s seeking confirmation of deal pricing or for infrastructure and pension funds who require independent confirmation of value. In addition, we can assist in the preparation of detailed modelling to assist entities make informed operational and financial decisions.
Contact our expert Alex Schuler for more information
Our transaction team combines a huge due diligence and M&A experience together with expert knowledge of energy markets and services in order to focus our investigations and advice.
Contact our expert Benjamin Lechuga for more information
Strategy advice and implementation
We can advise on new tailor-made corporate and business unit strategies in order to address the upcoming challenges in the energy sector. Additionally we specialize in the implementation of new and innovative business models to develop future markets and to create new revenue sources.
Contact our expert Rolf Bruegger for more information
SAP in the energy sector
Today, business and technology innovation are inextricably linked and the demand for technology-enabled business transformation services is rapidly growing. Deloitte technology professionals around the world know the global trends and help clients resolve their most critical information and technology challenges.
We believe that SAP implementations are not just about technology. They also represent optimal opportunities to optimize your business and to increase the customer engagement with new aspects in the value chain.
Each day across the globe and across all industries, we are busy deploying the latest SAP offerings, including SAP S/4HANA, to support real-time data access and analytics, enabling organizations to evolve their existing business processes and adopt new processes that can support the future of business.
Contact our expert Roman Mueller for more information
Tax advice in the energy sector
We can provide tax advice to the energy sector, for example in relation to changing regulations on BEPS. We can also assist you in tax efficient financing (leveraging and asset ownership implications), repatriation strategies, tax simplification and information exchange (rulings, beneficial ownership, CRS).
Contact our experts Jochen Wehrli for more information