Opinion Leaders
Energy providers under pressure
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BNP Paribas
For a long time, energy providers were seen as the “elephants” of the economy – large and slow-moving. But the expansion of renewable energy and electrification have injected new momentum into the sector, offering opportunities for investors as well.
The pressure is mounting – literally. Following attacks on Iran by the U.S. and Israel, oil prices surged in March from $60 to over $100 per barrel. Media outlets declared an “oil price shock”, and with good reason: despite declining oil intensity in the economy, crude prices remain the decisive factor. While far less oil is now required to produce goods compared to past decades – evident in oil consumption per unit of GDP (often called “oil intensity”), which stood at nearly $0.50 in the 1980s but has since fallen below $0.20 – global demand has never been higher, exceeding 100 million barrels per day due to sheer growth in manufacturing. This means that rising oil prices have a direct impact on daily production and, by extension, the entire industrial sector.
Expansion of renewable energy
To reduce this dependence, renewables must take on a far larger role. Unlike fossil fuels, they can be generated locally, eliminating reliance on distant imports. Switzerland has emerged as a European leader, with hydropower supplying roughly 60% of its electricity. Nuclear still contributes nearly 30%, but renewables are now the cheapest option. In Germany, solar and wind power cost between five and ten euro cents per kilowatt-hour; Swiss hydropower likely falls in a similar range. Nuclear, however, is pricier. While Swiss nuclear is officially pegged at six Swiss cents per kWh – including decommissioning and waste storage – critics argue new plants could cost 30 to 40 Swiss cents per kWh, far above renewables.
New momentum among energy providers
Expanding renewable energy is a monumental challenge. Simply building solar and wind farms is not enough – parallel efforts are needed to upgrade grid infrastructure and boost storage capacity. This holds true for Switzerland as well, where modernizing the grid is a cornerstone of its energy transition. The urgency is clear: roughly two-thirds of the country’s 6,700-kilometer transmission network is 50 to 80 years old and requires immediate renewal.
This shift has injected new energy into the utility sector. Once seen as the economy’s “elephants” – large, cumbersome corporations with modest growth – energy providers now face disruption driven by renewables. The transformation in power generation has shaken the core of traditional business models, completely reshaping competition in the sector. Smaller and mid-sized energy suppliers have entered the market, fostering competition and greater transparency.
Global electricity demand surges
Disruption is essential, observers argue. Renewables don’t just demand more flexible, multi-layered grid infrastructure – the world is also on the brink of an electrification surge. To meet climate goals, fossil fuels like oil must be drastically reduced, ideally to zero, meaning everything once powered by combustion is now being electrified. E-mobility is just one piece of the puzzle; entire industrial processes are also transitioning to electricity. This shift touches every aspect of daily life – just look at the average backyard, where gas-powered lawnmowers have given way to battery-operated tools. Add to that the explosion of new data centers, essential for AI and entirely dependent on electricity, and the picture becomes clear.
The result? Global electricity demand is skyrocketing with exponential momentum. Between 2015 and 2020, consumption rose by an additional 2,400 terawatt-hours (TWh). From 2020 to 2025, that jump nearly doubled to 4,700 TWh. Now, by 2030, another 5,400 TWh of demand is expected.
Energy companies for investors
The surging demand for electricity and the transition to renewable energy have made the utility sector one of the most compelling investment opportunities in the market. Major European energy providers include E.ON, Enel, Engie, Iberdrola, RWE, and TotalEnergies.
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