The digital revolution is slowly taking over the power sector. Data collection and exchange are growing exponentially, creating digital threats but also valuable opportunities in the industry. The power sector comprises of energy suppliers and distributors in electric, nuclear, coal, wind, solar and natural gas technologies. While the power sector varies across regions in terms of fuel use for electricity generation and end use, the operational structure of the sector across the world is more or less the same. The way power companies respond will depend on their regulatory environment, the place they operate, the structure of their portfolio of assets, dynamic customer demands, their economic maturity, and the level of technology adoption they require. Although several visions exist for the way the global power sector will evolve in the future, one thing is certain – the industry sits on the cusp of massive change. A SWOT analysis of the power sector provides a breakdown of the strengths, weaknesses, opportunities and threats facing the industry, in terms of internal and external components:
Power is undoubtedly a key driver of human progress. A SWOT analysis of the power sector’s strengths identifies features inside the industry that are a positive sign. These features need to be representative of areas over which the industry has a high degree of control. Some of the strengths of the power sector include:
- Rising rate of investment in renewable energy
- Established infrastructure
- Increased adoption of better and energy-efficient technology
Weakness
In SWOT analysis, weaknesses help identify features inside the industry that are low-performing or inefficient. The swelling of the global population and increasing rate of industrialization in developing nations have fueled humanity’s hunger for energy to unprecedented levels. Some of the common weaknesses of companies in the power sector include:
- Growing demand for energy
- Rising costs of electric grids
- Employee attrition
Opportunities
Companies in the power sector can identify various goldmines for growth using the SWOT analysis. The growing rate of data collection and exchange are opening new doors of opportunities in the energy industry. Opportunities are present all along the power-industry value chain, from generation to customer relationship management. Some of the key opportunities for power sector companies include:
- Increased tax incentive for energy-efficient automobiles
- Seasonal increase in the number of days of sunlight
- Lifted bans on off-shore drilling
Threats
A SWOT analysis of the power industry’s threats shows features outside the industry that are potentially hazardous to continued growth. They are often outside the control of the power sector companies. Presently, due to the sector’s social and economic impact, companies in the industry are under constant pressure to improve their efficiency and attain greater cost competitiveness. The main threats facing power sector companies include:
- Compliance and regulatory risks
- Uncertainty in climate policy and carbon pricing
- Commodity price volatility
To know more about how a comprehensive SWOT analysis can help your business
