Insights

Energy transition: Success depends on interactions, dependencies, and contingencies

The value of an Energy Transition Plan is that it forces the organization to look at the many interacting parts, the dependencies and the contingencies that must be considered if success is to be achieved. It is unlikely the plan as first conceived will be implemented unchanged. But the process of planning equips the organization to anticipate possible challenges or obstacles that will arise, understand their impact and be confident in their ability to pivot to a new, more viable solution.

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Energy transition: Success depends on interactions, dependencies, and contingencies

Choosing your energy transition pathway

An energy transition is underway. While this change is essential, it is fraught with challenges and uncertainties. The appropriate energy transition pathway is one that enables the organization to move confidently towards its goal, while remaining within its limits of operating cost impacts, capital availability and risk tolerance, and with key decisions staged to allow for mid-course corrections if necessary. To navigate the transition successfully, an organization must have strong alignment and embark on its transition pathway with its eyes open to the challenges and risks it faces.

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Choosing your energy transition pathway

Act now to reduce the impact of business disruption on energy costs and risks

The sudden shutdown of operations imposed on many organizations by COVID-19 is having profound impacts on organizations and the people within them.

With sudden and widespread change, it is hard to identify all the necessary actions and prioritize them. For many organizations, the change in operations will affect their need for energy.

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Act now to reduce the impact of business disruption on energy costs and risks

Electricity / 03.28.20

Your Class A Decision: Approach With Caution

Uncertainty about electricity demand over the coming months is an important risk factor for those who are considering their option to be Class A for GA purposes under the Industrial Conservation Initiative over the coming adjustment period. Distortions in electricity usage resulting from shut-downs due to COVID-19 are likely to be felt for several months longer and could impact Global Adjustment costs and the allocation of those costs into 2022.

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Your Class A Decision: Approach With Caution

Risk Management / 01.06.20

An effective risk management program is risk-responsive

It is useful to think of risk as “the impact of uncertainty on your objectives”. Nothing in our future is certain, but we need to identify when the degree of uncertainty and the potential consequences of uncertain events are big enough to really matter. If so, then we need to do something to manage that risk. Otherwise, we can just go about our business.

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An effective risk management program is risk-responsive

Energy Strategy / 12.19.19

RFPs are not a good tool for procuring expertise

Many organizations faced with the need to source energy sector expertise resort to that old procurement warhorse, the Request for Proposals, or “RFP”. Some public buyers consider themselves compelled to use an RFP when obtaining the professional services of a consultant or advisor.

Yet the RFP is a fundamentally flawed tool for procuring the expert advice needed to solve a complex problem.

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RFPs are not a good tool for procuring expertise

Risk Management / 09.12.19

Commodity price risk management: when to hit the brakes

You’re hitting the road for your daily commute. Driving can be risky and you want to arrive safely at your destination. You consider yourself a careful driver and you’ve adopted a strategy of maintaining 50% braking force for the entire journey.

Wait, what? Nobody drives like that.

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Commodity price risk management: when to hit the brakes

Energy Strategy / 06.28.19

Distributed energy resources: the next big thing in electricity is happening right outside your door

If you are a large commercial, institutional or industrial electricity user, the next big thing in electricity is happening right outside your front door. The deployment of Distributed Energy Resources (DER) on local distribution systems redefines the role of your local utility, and brings new opportunities for large energy users to reduce costs and manage their energy supply.

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Distributed energy resources: the next big thing in electricity is happening right outside your door

Energy Strategy / 04.30.19

Hedging, a tool for price risk reduction, not cost reduction

Energy buyers are tasked helping their organizations lower costs and manage cost uncertainty on the energy they need to operate. Energy price hedging is an important tool for accomplishing that goal. But to hedge effectively, we must clearly understand what hedging is for, and what it is not for. Only with the goals clearly in mind can we implement a strategy that will be successful.

In talking with energy buyers, it commonly emerges that many view energy buying as a speculative process. They see their job as requiring them to understand where the market is going next, so they can buy at the bottom and “lock in savings”. But the energy market is inherently uncertain, and no one can consistently predict market direction or the timing of market movements. Sounds like a stressful situation for these buyers!

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Hedging, a tool for price risk reduction, not cost reduction

Energy Strategy / 03.15.19

The imperative to engage senior management in energy

Public sector organizations like school boards, municipalities and hospitals face a requirement to update their public Energy Conservation and Demand Management plans by July 1, 2019.

While energy has long been on the radar as a facility cost to manage, energy strategy is becoming an imperative at the senior management level as well. For example, an article in the Harvard Business Review makes the case for energy strategy to be a C-suite issue.

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The imperative to engage senior management in energy
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