Archive for the ‘Low carbon energy’ Category

Load Forecasting Crap Shoot and IRP Risk Reduction for Electric Utilities

“You don’t have to rely on multi-decade forecasts because you don’t need to build things with five-year-plus lead times.”

In addition to lowest cost, renewable energy systems can be deployed in a 1/3 of the time and modularly compared to large scale thermal plants. This significantly reduces risk for the electric utility and industry pundits credibility who’s load forecasting has been way over projected in the last 10 – 15 years as this article illustrates.

The ambiguity during this energy transition period makes forecasting difficult which includes forecasting high cost/risk grid upgrade requirements.

Full article here

As technology upends grid

fundamentals, is load forecasting a

crapshoot?

Systemic changes to the electricity system make load predictions more difficult, but may also lessen the impacts of mistakes.

Each year, electricity consumers in the United States spend billions more than necessary to keep the lights on, in large part because the utility sector has been overestimating its needs . . . . . .

#electricutility  #renewableenergy  #solarenergy  #utilityIRP

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The “Resource Curse” and Renewable Energy

The “resource curse” in this article below goes away in a #renewableenergy dominated world.

Its striking that the communities globally that supply #coal, #oil, #gas and other #fossilfuels are some of the poorest and most polluted on earth. These are sad social and environmental justice stories in this article and are hard to read. All consumers of the downstream products are part of this story and can make a different choice.

Renewable energy is a main component of the electrified world in the #lowcarbonenergy economy. With its modularity and lack of a fuel supply chain, its easily and quickly deployable in all 195 countries on earth without “resource curse” communities. Speed to a clean energy market with social and environmental justice included is hard to beat.

But it takes is good governance at all levels to make it a reality.

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This forgotten element could help solve our energy crisis and may be key to meeting Paris Accords.

It’s been illustrated in various scenarios by a large number of entities like the IEA, World Resource Institute, Shell, DNVGL etc. that meeting Paris 2 degrees C in the next 40 years is difficult. While renewables, energy storage, energy efficiency are scaling up quickly, they alone will not get it done. In many of the more optimistic scenarios, bio energy carbon capture (BECC) is holy grail for meeting that timeline but its not  anywhere near ready for deployment.

Hydrogen, while derided over the years as not being efficient and dangerous (its way less dangerous than gasoline) may be a key ingredient for the low carbon energy industry. As pointed out in this weforum.org article, it can be used economically for building heating, transportation, maritime shipping and potentially electric grid storage. H2 cars & trucks are already driving in many countries including the U.S. and initial filling station & supply infrastructure (using existing natural gas pipelines) are being deployed. 

But the big issue is how to create H2 without GHG emissions. Electrolysis is costly currently. Lower cost R&D stage electrolysis  when combined with abundant low cost renewable energy to power the system looks promising. The question is can it be scaled up quickly by entities like Shell and others who are working diligently on H2 deployment?

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The Low Carbon Energy Revolution – Solving the Management and Culture Challenge Begins with EQ

Low carbon energy transition This is the second of five posts that focus on the challenges and solutions of the low carbon energy transition. (See first post here.)

The management and culture challenge may be the most important factor to work through before accelerating diversification and transition efforts, according to industry leaders who are driving the energy transition.low carbon energy, decarbonization

Corporate culture is often defined as the collection of shared values, visions, customs, traditions and internal goals that contribute to a company’s uniqueness. Consciously or unconsciously formed by business owners or founders, corporate culture issues can inspire or impede the success of team efforts to reach company goals.

With something as significant as moving from an established fossil fuel company to a low carbon energy business, the basic challenge is how to make fundamental internal changes that will accommodate the new business model in a demanding, highly ambiguous market environment. It’s essentially an entrepreneurial startup with a large number of tenured employees.

Success stories of corporate innovation and incubation in this kind of environment are as rare as a certain mythical rainbow-riding flying horse.

The Harvard Business Review has called it a “two culture problem.” Revenue from existing operations carry the company, which is supported by long term, hardwired organizational systems. The company’s operations are well tuned, there is a referable market history to guide decisions and management goals for stability, efficiency, and consistent incremental growth.

New innovative business groups tend to form cultures on an ad hoc basis that are wholly different from the main company. There is usually no input or forethought into culture creation; the focus is on the product offering and getting it to market. Innovators and risk takers are often hired from outside the company, bringing in a culture that supports operating models that are entrepreneurial at the core. Existing employees transferred into this group will have difficulty adapting this new operating environment, which often ends up in chaos.

That chaos, according to Home Depot CEO Robert Nardelli, happens because “there’s only a fine line between entrepreneurship and insubordination.” Depending on your vantage point, what looks like innovation flies in the face of established corporate convention.

Emotional Intelligence Diminishes the Two-Culture Problem

According to Amy Steindler, an emotional intelligence coach for corporations and executives, and President of EQ Insights, emotional intelligence training and coaching are at the heart of successful corporate incubation of a new innovative group. Her perspective on the need for emotional intelligence at the executive and cultural levels for a successful low carbon energy transition comprises the remainder of this post.

Two decades of academic research, much of it found here, suggests that emotional intelligence may be the differentiator between sustainable outperformance and mediocre results, assuming cognitive intelligence (IQ) and industry and technical knowledge are up to speed.

The low carbon transition executives who emerge as industry leaders will be those who recognize the two-culture problem and embrace emotional intelligence as the bridge to change management and to balancing dual cultures operating under the same roof.

Just as emotional intelligence has a role in change management at the team level, it also serves as the foundational skill set for “managing up.”  Executives must engage corporate board members in adopting a significant business model revision while skillfully managing the challenging work of cultural change.  This balancing act will take a measure of emotional intelligence all by itself.  The good news is that as they make the business case for long-term profitability that results from retaining top talent with demonstrable emotional intelligence skills, they will have the support of rigorous academic research and in-depth case studies.

Emotions Provide Essential Data for Integrating Innovative Teams

Executive management has historically had an aversion to the “soft skills” side of emotional intelligence—mindfulness, self-awareness, appropriate emotional expression, empathy and optimism—claiming that they aren’t directly measurable on the balance sheet for which they feel responsible.  This perspective misses a crucial understanding of the role of emotional intelligence in the workplace.

Emotions are data, and the data points that come from practicing emotional intelligence skills are critical elements for success in two key areas: decision-making and stress management.

Neuroscience has shown that “rational” decisions are actually emotional ones.  Even after we’ve gathered every bit of analytical data available, we ultimately solve problems based on preferences.  In other words, we don’t make decisions based strictly on the data.  We make decisions based on how we feel about the data.  Faced with two equally rational choices, we pick the one we feel better about.  Without the ability to tap into our emotional data set, which includes acknowledging our true risk tolerance, and our response to mistakes, we are unable to choose among logically sound alternatives, a syndrome known as “analysis paralysis.”

For an innovation team working with little or no market history or data, decision-making relies on their ability to manage intuitive and emotional data sets.  Understanding which data are relevant requires application of specific emotional intelligence skills that govern reality testing, impulse control, and intuitive problem-solving.

Emotional intelligence skills also underlie an organization’s ability to consistently manage healthy responses to the unpredictable and unavoidable fallout that comes from rapid or continuous change.  New divisions are hotbeds of ambiguity, insecurity, and the inevitable trial-and-error mistake making.  No matter how much leaders know about their industry, they won’t be able to realize their strategic vision without a team that functions well under stress. That stress is amplified in the low carbon energy era, because while the regulatory environment is highly uncertain, market drivers still require that companies make significant long-term decisions now, before a complete set of regulations are in place.

For well-established companies attempting the transition to 21st (and 22nd) century sustainable energy production, hiring experienced executives who also model emotional intelligence (and who make the resources available for ongoing assessments, training, and reinforcement) is the key to long-term success.  Existing executive teams who have become successful without a focus on emotional intelligence or mindful leadership will have to make a choice—experience the discomfort of learning a new paradigm of leadership or lose their competitive edge.

Established industry leaders who exist right now in a comfort zone they’ve earned over decades of hard work may find that innovation has given way to a prosperous status quo that they’re reluctant to tinker with.

Success in the low carbon energy transition will require executive teams to intentionally normalize discomfort in order to spark innovation and demonstrate the flexibility, responsiveness, social responsibility and inspiration necessary to engage millennial and subsequent generations.

Effective transition leaders will recognize that the workforce and emerging leadership of the next several decades respond enthusiastically to leadership they perceive to be handling the pace of change with authenticity, transparency and accessibility.

A Metaphor for Putting Employees FirstLow carbon energy

The transition from fossil fuel-based energy to low carbon sources is a metaphor of modernization that goes beyond production of energy.  Energy producers will have to take into account information that they can’t un-know: just as fossil fuel energy production is not sustainable, neither are the management models that served to build the industry decades ago.  The next generation of workers has witnessed the costs of overwork and burnout by observing their predecessors’ quality of life, and they’re not buying into it.  They’re willing to work, but they’re not willing to sacrifice the most productive years of their lives by working for companies that don’t put social responsibility and the well-being of their employees first.

How can executives lead the cultural transition?  By creating a permanent culture of mindfulness-based emotional intelligence, ongoing training, and skillful coaching.  By using the appropriate tools to assess every team member’s emotional intelligence profile, and to understand which combinations of skills are the best predictors of success for a given role on a given team.  By engaging an experienced coach or consultant to model these skills and to guide them in developing their own.  By committing to change management practices that are inclusive and flexible enough to withstand the constant adjustments to new information as it arises.

The executives who will rise to the top as leaders of the low carbon energy transition are the ones who are willing to commit to fresh thinking, curiosity, and the present moment mindfulness that are the hallmarks of innovation and future-focused sustainability.

 

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The Low Carbon Energy Revolution – Challenges and Solutions for the Transition

The most rapid and radical change in energy production and use in history is underway. Market signals for low carbon energy generation are abundant, if not definitive, and every sector including power generation, transport, buildings, industry and agriculture are in transition. Driving this transition is the consistently lowering cost of renewable energy technology, and the imperative to lower and eventually zero-out carbon altogether to meet the goals of the Paris Accords.

According to the International Energy Agency, “Limiting the global mean temperature rise to below 2°C with a probability of 66% would require an energy transition of exceptional scope, depth and speed. Energy-related CO2 emissions would need to peak before 2020 and fall by more than 70% from today’s levels by 2050. The share of fossil fuels in primary energy demand would halve between 2014 and 2050 while the share of low-carbon sources, including renewables, nuclear and fossil fuel with carbon capture and storage (CCS), would more than triple worldwide to comprise 70% of energy demand in 2050.”

Deemed the “The Low Carbon Law,” carbon emissions will need to decrease by half every decade until 2040. That transition timeline requires

essential and intertwined changes in regulatory policies, infrastructure, technologies and fuels, markets and institutions, all happening concurrently. The transition is either evolutionary or revolutionary with a high degree of disorder depending on your vantage point.

With competing clean technologies riding the steep cost decrease slope, the energy transition is happening quickly and extemporarily, as the ship lacks any semblance of a rudder. Ambiguity is high and increasing, and the stakes could not be higher or less clear for incumbent market leaders.

The lack of regulatory frameworks in particular puts market participants, particularly fossil fuel related companies in a high-risk dilemma – jump now, assuming the regulation will come, continue with current products that may become stranded assets in the near future or adopt some middle-of-the-road strategy.

A mining company that recently engaged me to guide them in low carbon transition strategies illustrates this ambiguity vividly. The company has IP and extensive capabilities that may be transferable to solar, hydrogen, storage and high frequency data communications among others. Determining the new models and technologies to pursue, when to jump, and what the near-term consequences are, both economic and culturally, comprise the strategic and tactical questions we are working through the “ambiguity fog”. Fighting the business as usual momentum concurrently is a daily part the effort. Balancing these opposing forces in the company is the key to a successful transition and diversification effort.

This is the first of four posts looking at the following challenges facing oil & gas, mining, electric utilities, and their support supply chain partners as they look at potential strategies for the energy transition. Each post will feature an industry leader working in the field of the challenge examined.

The Challenges

  1. Management & Culture – By what method do you establish a new culture that rewards risk taking, innovation, and learning completely new ways to operate? Can leadership adapt and change to lead the transition in an entrepreneurial manner while integrating the effort into 50+ years of successfully managing an entirely monolithic company and product?

2. New Business Model Risk – What is the winning model for a given company, considering their historical core expertise, technical capability, intellectual property and market reach? As with a startup, it can be catastrophic to go down a particular path only to find it’s not the right strategy.

3. Margin Parity – How do you match the relatively high margins enjoyed in the oil & gas industry, for example, compared to lower margins (at this point in market development) in renewables? How do you launch a new low carbon offering with accretive profits from day one rather than sustaining losses which impact earnings in each quarter, triggering investor anxiety?

4. Timing – How quickly is a particular market transitioning? What if the launch is too early or too late? With quarterly pressure to produce, will the investor community be support the effort?

Regulatory Risk lurks in the background and is present in all the above challenges. For example, lack of a common mechanism for C02 value creates price confusion as subsidies for the fossil fuel industry are still highly out of balance with the renewable sector. Erosion of regulatory certainty, where a newly established requirement is abruptly changed, is still fresh in the memory banks  (e.g. Spain’s retroactive withdrawal of renewable energy subsidies for granted and operating generation facilities).

The Culture and Management Imperative

The first of four follow-on posts will focus on the Management & Culture challenge which has been described by some industry leaders driving the energy transition as the most important factor to work through before accelerating any diversification and transition effort.

Amy Steindler, an emotional intelligence coach for corporations and executives, and President of EQ Insights, will illuminate how emotional intelligence training and coaching are at the heart of successful corporate incubation of a new innovative group.

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