The market sentiment about incumbent energy players is at an all-time low. It comes just as they need to protect their patch and communicate with their customers in a new way. The ‘cash-cow’ of customers just signing and forgetting is long gone.

Incumbents must change their mindset and delivery models to encompass agility, innovation and rapid deployment. Just as Kodak, Nokia, Blockbuster and Borders were fatalities of disruption some companies in the energy marketplace risk the same fate if they fail to ‘change their spots.’ The companies understand this challenge but are not yet hurting badly enough to require rapid business model evolution. Understanding and trialling the best of global technology is necessary but not sufficient for survival. The day of reckoning for incumbents is approaching and those most proactive in solution deployment will be the ones that fare best.

Opportunities for new entrants are plenty but they are also not easy. Technology providers need access to the market, solar and wind farm developers need power purchase agreements (PPAs) and new retailers need deep pockets. Without in-depth market knowledge, strong connections and a creative and compelling business plan, many with great promise will not succeed. Those that create value to both end customers and all those along the value chain will be the winners.

There are however many technology solutions coming to market to provide customers with options to save money and increase control. Solar and wind are already the cheapest forms of new build generation and set to continue to get cheaper. The latest AEMO levelised cost of energy (LCOE) estimates have new build wind at $63.60/MWh and solar PV at $58.40/MWh, less than any other generation source. Renewables are set to be the majority generation provider within 10-15 years and, according to Bloomberg New Energy Finance, produce 90 per cent of Australia’s energy needs by 2050.

Demand management and load-shifting energy storage are already economic and wider use of batteries, electric vehicles, microgrids, building-integrated solar and many more are rapidly approaching price parity. There is certainly no shortage of technology solutions being developed to take advantage of the transition to a low carbon economy. Deloitte is working with many of these technology providers to build effective and creative ways for them to grow substantial and profitable market penetration.With incumbents needing to transform, new entrants looking to grow and technology providers accelerating growth, the finance sector is working hard to provide support for the best opportunities. Commercial mechanisms that are growing quickly and have the potential to make significant impacts include Green Bonds, Corporate PPAs and Building Upgrade Finance.

In particular, the various forms of Corporate PPAs are currently growing rapidly in Australia and any business with an energy bill of more than $1 million is likely to be able to negotiate significant cost savings in this way. We have seen organisations save 30-40 per cent on their bills from pursuing this opportunity.

It’s an exciting time to be in the energy industry. After 20 years of talking about major change, it is now happening in front of our eyes. Those that stall and ponder any longer are going to find themselves far behind as the changing balance of power takes hold.

More than anything, the proactive and educated consumer is emerging as the one with all the power. They are no longer just price-takers. Whether it is householders buying financed panels, corporates backing a new solar farm to reduce power prices or governments treating their energy bills as an economic development investment rather than a cost, the consumer is now dictating their interactions with the energy market.

This is a major shock to the system for those that assumed the centralised approach to energy supply would remain in place until their retirement. It is also challenging for engineering-heavy organisations that need to consider business model driven innovation.

When coaching cleantech entrepreneurs on how to pitch, the key message I hope to impart is that the pitch must be all how the proposed solution delivers value to the customer. As the balance of power changes, only those in the energy sector that heed this lesson will survive.