As one of the most regulated industries in the world, the energy industry is affected by tariffs, tax credits, incentive values, competitive production policies, and increasingly, load-side technologies. Energy industry leadership requires new skills and new solutions. Clean energy alternatives are becoming mainstream, regulatory policies are unclear, and technology is the driving force for both efficiency and innovation. Is your company positioned to grow in this new environment?
For decades we have been reliant on the centralized power grids that have been the backbone of our energy system for nearly 100 years. This system has become inefficient and no longer meets the needs of today’s businesses or consumers. For businesses, energy costs are one of the highest non-discretionary budget line items. Consumers are also looking for ways to cut energy costs, with the smart thermostat market expected to reach $6.5 billion by 2022. The demand for renewable generation options is gaining more momentum every year, and infrastructure changes are required to meet these needs.
Deloitte’s 2018 Energy and Resources Industry Outlooks mentions renewable energy as a solution, “Market conditions have been tough in recent times. The oil and gas sector has faced three and a half years of depressed commodity prices, slashing cash flows and investment capacity, and needing to favor short-term cost-cutting over long-term planning. The electric power sector has faced stagnant demand in the US amid moderate power prices, resulting from the abundance of low-cost natural gas, though investment needs remain high, whether for protecting the grid against storm damage or cyber threats, for integrating distributed and variable generation resources into operations, or for meeting customer aspirations for more choice and more control. How can this tension be resolved? The renewable energy sector has certainly experienced impressive growth in the market and impressive success in driving down costs, but regulatory and policy uncertainty has paradoxically increased rather than diminished with its greater presence in the market.”
And a New York Times article, Challenges for the Energy Industry, further elaborates on policy issues, “The policy risk stems from increasing efforts globally to address climate change and resource dependency, technology risk from the rapidly improving economics and competitiveness of renewable energy and electric vehicles, and investor risk from the ever greater engagement on the part of institutional investors with regard to the impact these factors are having on the traditional business models of the major oil-and-gas companies. And as renewable-energy technologies and E.V.s become even more efficient, and as batteries and storage become more competitive, so too will policy ambition increase, intensifying investor concern over the sustainability of conventional energy companies’ business models.”
Utility Dive’s State of the Electric Utility survey highlights IoT concerns for the energy industry, “For the second year running, cybersecurity concerns topped the list of the sector’s most-pressing issues…As utilities upgrade their systems to provide better grid intelligence and communicate more with customer devices, there are more ways than ever to launch a cyber attack against a utility.”
Customers are exerting more control to gain a level of predictability for their energy needs with load-side technologies like microgrids. Growing at a consistent rate, the microgrid market is expected to reach $23 billion by 2021. Combined with the pressure for decarbonisation which is seeing a decrease in the cost of renewable generation capacity and improvements in battery technology, including widespread acceptance of electric motors in vehicles, the transformation of the energy industry has arrived.
Energy industry leadership still requires technical skill sets, but is broader than just fossil fuels. Distributed power generation networks require lateral thinking capabilities to optimize sources based on time, need, and location. Of course, negotiation and collaboration skills also remain important in order to work with NGO’s, regulators, and other policymakers.
As businesses and consumers become prosumers, energy industry executives will need to be able to interact with their clients from a position of partnership. To be successful, you’ll need to demonstrate an understanding of how changes impact them and look for mutually beneficial outcomes. A final skill required is financial modelling. The new market structure is interconnected and complex compared to the historical oligopolistic structure.
At Sheer Velocity, we have years of executive recruitment experience in the energy industry. Our recruiters have worked in oil and gas, electric, solar, wind, and coal. To learn more or for help with your executive leadership openings, send us a note. We’ll work with you to determine the specific requirements that best meet your needs.