Strategy and Sustainability at HSE: Managing a Utilities Company in Times of the Energiewende

Abstract

The case introduces the situation of HSE, a mid-sized German utilities company and leading provider of green energy in the year 2014. The German energy industry used to be very traditional with low levels of innovation. This changed with a major deregulation of the market in 1998, which subsequently led to a severe market shake-up. Established players encountered significant challenges and new players saw chances to enter the market. After the deregulation, HSE successfully transitioned from a regional energy provider operating in a secure and regulated monopoly to a successful nationwide player investing in green energy production. Thus, the company seemed well suited to adapt to the next major disruption in the market: the Energiewende. This term describes Germany’s transition to a sustainable energy system. The German government introduced several regulatory measures to boost green energy; however, details of these regulations changed frequently so that it was difficult for companies to predict future developments and also HSE suffered from these uncertainties. The case describes this situation, the company’s many efforts in sustainability, its situation as a leading provider of green energy and the strategic and operational challenges it faces in terms of regulation, market demand, product differentiation and strategic choice.