In June 2023 I returned to energy consulting after 6 years of ”something completely different”. The absence has really highlighted the change that took place during that time, and still continues. A few observations and thoughts on what the changes mean in terms of decision making:
- Batteries: in 2017 they were ”maybe one day” – in 2024 the investments are pouring in.
- PtX: from ”somebody once mentioned it in a seminar” to large scale investment plans, and first commercial deals taking place.
- CCS has turned from ”doesn’t make sense” to being a necessary part of climate change mitigation.
- Intermittent generation ramped up fast and the effects of increased production are clearly visible in the interest towards, e.g, batteries and PtX. Investments happen without subsidies, not because of them.
- SMRs are discussed as a realistic option and large scale geothermal heat is already changing heat generation
What do these fast changes imply in terms of decision making?
1) Many of the new technologies are increasing flexibility of the system and the coupling between different forms of energy production and consumption. This means that the choice of a heat generation technology might have a link to, e.g., reserve markets for electricity, or the expected value development of hydrogen. The change creates a need for more in-depth investment and operational analysis & modeling tools that can help decision makers make sense of the increased complexity.
2) There is still a lot of change on-going (and shocks seem abundant) which creates both opportunities and uncertainty in long-term asset value. How can you find robust investment strategies that perform well in many possible futures? How can you ensure adaptability? In addition to modeling, foresight and scenario capabilities are in vogue for a good reason.
3) The new technologies are also often easier to invest & divest in a modular fashion. Increased technology coupling and timing opportunities highlight the need for active portfolio optimization / management. Portfolio thinking is the way to go, instead of individual asset value maximization.
4) Many of the technologies flipped from ”too high costs” to being economically feasible very fast, because they made sense from the system perspective. Understanding ”what would improve / support the system” can be more fruitful in terms of strategy creation than strict cost comparisons.
5) And last, but not least. The need to integrate knowledge of different technologies, business models, markets and decision support tools is increasing. Knowledge management and team (or network) building increase in importance. Interacting assets need an organizational structure, or a culture, that supports their combined value generation.
No surprise, the projects I’m working with have completely different topics compared to 2017. Except for DDs – there are always DDs.