European utilities at an inflection point: Four strategic evolutions ahead

McKinsey & Company

Alexander Weiss

Research

25 Pages

McKinsey argues European utilities face an unusual convergence of forces — electrification, AI-driven demand, sovereignty concerns, and heavier regulation — that’s splitting the industry into four distinct strategic paths. Germany’s incumbent utilities now own just 26% of generation capacity, down from 82% in 2000.

Key Takeaways

Ownership flips fast: German utilities' share of installed generation capacity fell from 82% in 2000 to just 26% today, as IPPs and prosumers took over.
Curtailment keeps rising: Germany, France, and the Netherlands curtailed nearly 4 TWh of renewable power in 2025, an 18% annual growth rate since 2020.
AI cuts service costs: Gen-AI-driven customer service could cut cost-to-serve by 40 to 70%, as utilities race to control the customer interface.
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