Growing pains: how are corporate power and renewables strategies adapting to energy transition challenges?
Power and renewables companies’ strategies and portfolios are changing
3 minute read
Norman Valentine
Director Corporate Analysis, Head of Corporate Power and Renewables Research

Norman Valentine
Director Corporate Analysis, Head of Corporate Power and Renewables Research
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Corporate strategies in the power and renewables sector are under investor scrutiny. Downgrades from leading renewable players Ørsted and EDP during 2024 have put company growth in the spotlight.
Are these negative headlines symptomatic of a wider sector malaise? Or can the leading global power and renewables developers capitalise on the huge growth in renewable power and low-carbon energy markets through this decade?
In our recent Corporate Strategy & Analytics Service (CSAS) webinar, we explained how corporate power and renewables strategies are adapting to energy transition challenges. Fill out the form to watch the replay and read on for a brief introduction.
Company budgets are up but investment is shifting
A look at 2024 budgets shows investment in renewable power is clearly still rising, just not as fast as might have been expected a few years ago. Aggregate utility company budgets are up 4% year-on-year. Renewable power spending by the major European oil and gas companies is set to increase by a third this year.
But company budgets show corporate spending choices have shifted. Power companies with networks businesses have increased the proportion of investment going into grids. This has been typically balanced by a lower share into renewable generation.
Capital allocation shifts reflect changing perceptions about risk and reward. Policy and regulatory support for grids, often including inflation linked returns, has become more attractive compared to the often-intense competition for opportunities in renewable power and other low carbon investments.
Strong renewables generation growth to 2030
Despite industry challenges, we see strong company renewable power generation growth to 2030. For the ten leading European utilities in our coverage, we estimate renewable power generation will grow at an average annual rate of 14% though this decade. For the Euro Major oil companies, the corresponding rate is 22%, albeit from a lower base.
Among the utilities, some of the leaders are beginning to pull away from the pack. RWE stands out, becoming the largest renewable power generator in the second half of the decade. TotalEnergies is the clear leader among the oil companies, with generation comparable to the leading European utilities by 2030.
Portfolios will evolve but not all are equal
Beyond the headline growth numbers, portfolio choices will determine how company cash flow evolves. Growth in generation does not directly translate into growth in operating cash flow due to varying margins across each of the renewable generation technologies.
Offshore wind, with its higher upfront capex, generates higher unit operating cash flow relative to other technologies. As a result, companies with higher proportions of offshore wind in their generation mix will generate stronger cashflow growth through this decade. Ørsted’s renewable power cash flow rivals RWE and Iberdrola’s by 2030, despite 25% lower power output.
A mixed outlook on company targets
Many renewable power developers have set ambitious capacity growth targets for 2030. We have compared targets against our company-level capacity projections based on how portfolios stand today. The comparison shows a mixed outlook.
We think some companies will hit their targets given portfolio evolution to date and our view of their development pipelines. Other companies, which we think were off-track, have pared-back their targets and their revised goals now look more achievable.
But there are a handful of companies with capacity growth that is back-end weighted and are at risk of falling short. In aggregate, our net capacity forecast for companies with a 2030 target is about 20% below the companies’ combined target. One outcome could be further dialling back of company ambitions.
Business development over the next few years could also change the picture. Acquisitions or large-scale tender wins, not included in our base case, could help close the gap.
Increasing corporate differentiation
The balance of risk and reward will determine future company investment. Companies are positioning in a variety of ways to mitigate future price volatility, manage other portfolio risks and create value through arbitrage.
These approaches include portfolio diversification, power purchase agreements, storage, project hybridization, hydrogen and power-to-X as well as market interconnection. Activity is increasing in all these areas.
Given the variety of different investment avenues, we expect widening strategic differentiation in the power and renewables sector. Company portfolios will not only be bigger but also more complex and more diverse by the end of this decade.
Get further insight into the Corporate P&R strategies
This CSAS webinar offers detailed analysis of these themes by company and technology, illustrated by charts. Fill in the form at the top of the page to watch the replay.