RESEARCH REPORT
The energy provider’s guide to net zero
Managing consumer affordability and an affordable energy system
10-MINUTE READ
September 12, 2024
In brief
- Massive net-zero investment means energy providers are faced with the challenge of balancing an affordable transition and a timely one.
- Our global research of 16,800 energy consumers shows most support the energy transition, but fewer than half are willing or able to pay for it.
- We have identified five Strategies that will lay the groundwork for a sustainable and affordable net-zero future.
The energy provider’s dilemma: An on-time or affordable transition
The investments required to transition the power system to net zero are colossal. By 2050, according to our analysis, we will have to invest $115 trillion—$53T in clean power generation, $42T in transmission and distribution and $20T in interim fossil fuels and alternative technologies (e.g., carbon). Energy providers are unable to shoulder the investment costs alone.
According to our analysis, completing the required investments will more than double electricity costs as a percentage of household income. But consumers cannot afford to support this scale and pace of investment. Meanwhile, keeping the transition affordable will delay achieving net zero by 35 years.
Consumers globally are struggling to pay their energy bill
In 2022-23, a combination of factors created the perfect storm for consumer energy bills to spike. Energy demand increased rapidly in the post-pandemic economic rebound. The Russia-Ukraine war caused natural gas prices to soar. Supply chain disruption, global demand for raw materials and general inflation made matters worse—further contributing to price increases.
As a result, consumers are struggling to pay their electricity bills. According to our research, one in three households have had challenges paying their bill in the last 12 months.
37%
of households experienced challenges paying their energy bills in the last 12 months
81%
of energy consumers are interested in the energy transition
46%
of energy consumers are willing or able to pay more to support clean energy initiatives
61%
of energy consumers selected affordability and reliability-related expectations as their #1 priority
Most consumers see value in net zero, but only some are willing to pay more
Most energy consumers believe that the net-zero transition is a shared responsibility—in fact, 69% believe individual consumers have a role to play. However, most are unwilling or unable to pay more on their monthly bill to help. While 81% of all residential consumers believe the energy transition is important, only 46% are willing or able to assume some of the cost increases required. Those willing to pay more tend to be younger, have higher incomes and live in urban areas. But the readiness to pay a green premium for clean energy initiatives extends beyond these demographics. Notably, two out of five low-income consumers have expressed a willingness to pay more, suggesting that household income is not the only factor.
Additionally, most consumers are interested in clean energy-related products and services but expect those offerings to also help reduce costs. Energy providers are uniquely positioned to educate and drive adoption to help reduce emissions and customer bills.
An affordable path to net zero: Only energy providers can lead the charge
Everyone has a role to play in an affordable net-zero transition—consumers, communities, policymakers and regulators. But energy providers must lead the charge; they will be the orchestrators. They are responsible for managing the balance between equitable access to affordable electricity for consumers and a reliable, secure energy system capable of meeting increasing demand.
Energy providers must go beyond transformation and reinvent business-as-usual across the utility value chain. At the heart of that reinvention is an industry-leading digital core. It enables organizations to achieve their ambitions—using the right mix of cloud infrastructure and practices for agility and innovation; data and AI for differentiation; applications and platforms to accelerate growth, next-gen experiences and optimized operations—with security by design at every level.i
Five Affordability Strategies
Our Strategies will lay the groundwork for a sustainable and affordable net-zero future.
Energy providers can leverage data, AI and ongoing consumer research to understand individual needs, values and worldviews. An intimate consumer relationship is vital to inspiring the consumer action required for an affordable net-zero future.
29%
of consumers are willing to pay a substantial monthly premium on their energy bill (>15%). Providers can target these consumers with individualized messages based on persona.
Energy providers need to evolve from an asset-centric to a customer-centric organization. This means restructuring their systems, people and offers to align with consumer need across all interactions.
Energy providers can transform how they operate, evolving from cost cutting to innovation. This includes aggressive technology reinvention which will enable new ways of working and a cost and productivity reset.
31%
of energy provider’s working hours can be transformed by generative AI, significantly improving productivity.ii
Energy providers can develop new clean energy products, services and business verticals which cater to a more sustainability-aware consumer. The resulting green premium can offset the cost of other decarbonization efforts.
87%
of consumers indicated that they would be interested in purchasing energy related products and services.
Energy providers are taking active roles in consortia to improve reliability and deliver clean, affordable electricity faster. Such public-private collaboration requires strategic focus, practical governance, and rigorous project management.
The scope of our research
This extensive analysis comprises multiple streams of research to explore the economic pressures customers face today and how this will influence the net-zero transition.
- A 2024 Accenture New Energy Consumer survey of 16,800 residential energy consumers across 18 countries to better understand current sentiment on energy affordability and the net-zero transition.
- Video testimonials from customers in six countries to shed light on their needs and wants.
- Economic modeling to evaluate the impacts of global power-sector investments on the household electricity burden and the potential delays to net-zero resulting from affordability constraints.