This guidance note has been developed to support energy utility companies in developing transition plans to a clean energy power system, and for asset owners, asset managers and other stakeholders to understand those plans and the risks and opportunities they imply. The transition to a clean power system must occur by 2050; transition plans provide companies and their investors a shared basis of understanding for how the utility company will chart its path through the coming energy transition. We suggest a rolling five-year business plan and a strategic transition plan with the following five goals:
- A highly distributed clean energy power system (95% non-fossil fuel generation) by 2050.
- Emissions of 184g/kWh across all generation sources by 2035 (IEA target for the world consistent with achieving warming of no more than 2°C), or the locally relevant equivalent, whichever is lower.
- A high level of customer satisfaction as the business evolves.
- A CEO and executive succession plan requiring strategic leadership capacity to drive the clean energy power transformation, and a remuneration strategy consistent with the transition.
- Demonstrated ROIC>WACC over the plan period, taking account of the life cycle of each asset and all attributable costs over the life cycle.