The big utility companies have been called on to embrace the major changes underway in the energy system.

The call came in a report from Forum for the Future and Friends Provident Foundation which drew on the expertise of six former utility company chief executives, energy ministers and a high-ranking civil servant.

Contributors Volker Beckers, Joan MacNaughton and Ian Marchant wrote an open letter to the Sunday Times newspaper to accompany the report, saying the big players that they needed to change in order to avoid stranding their assets.

The report said forecasts for renewables and battery storage costs and deployment have been “chronically underestimated”, and added that the speed of the energy sector’s transformation has caught the industry off-guard, leaving the incumbents fighting for a place in the future market.

Challenges remain

The paper warned investors that the “old-world business model of large power stations and passive consumers” is being rapidly undermined by a decentralised, renewable, digitised and people-led approach.

The report also pointed out that the number of homes, communities and businesses now generating their own renewable power has risen to more than 900,000, up over 12,000% on 2010.

Challenges highlighted by the charities included decarbonising urban heating and electrifying transportation.

Other contributors to the research included former energy ministers Sir Ed Davey and Charles Hendry.

Marchant, who was Chief Executive at SSE from 2002 to 2013, said: “There is now a ‘prosumer’ revolution, where ordinary people and businesses are both producing more energy, with more and more households and communities becoming generators, actively creating their future energy system.”

Steve Holliday, UK Executive Director of National Grid between 2007 and 2016, added: “Energy policy can either speed up or slow down the rise of renewables, storage and electrification of heat and transport, but it cannot stop it.”

Will Dawson, Associate Director for Energy and Climate at Forum for the Future and the lead author of the report, concluded: “It’s important that the large energy companies that have dominated for so long are playing their part to the full so we don’t lose the expertise and valuable assets they have built up.”

> Download the report