New Year is traditionally a time when resolutions are made and we choose to make a change and do something new, or at least something differently. In the energy sector, the clean technology revolution is now an established fact and will be the key component of all future commercial activity. It’s an exciting opportunity but also an opportunity that carries risk. To that end, and for the benefit of those who may have yet to resolve the issue of their resolution for 2023, we at LCTS thought it might be useful to consider some of the specific challenges that we encounter and what organisations in our sector might do to meet them.
Around the world, but particularly in Europe, the race is now on to introduce new and cleaner energy technology with a view to creating net zero economies. Across the various jurisdictions there are a raft of valuable incentives available for those developing renewable energy projects which meet the required emissions reduction criteria and those putting renewable energy products into the market.
In addition to these incentives, governments have also adopted highly aggressive schedules for decarbonisation and, in order to meet these targets, they have specifically mandated a minimum market share for renewable energy products. This market share is ring-fenced from competition from non-compliant energy alternatives, making it a very attractive opportunity for those who qualify and the European Union is particularly aggressive in this regard. The combined effect of valuable incentives, challenging targets and, currently, very little in the way of commercial production capacity to meet the mandated demand, means an unprecedented business opportunity for those organisations equipped either by technology or know how to compete effectively in this space.
The opportunity is one of potentially very high reward but the key is to reaping that reward is to develop successful projects. This is where the extensive experience of LCTS can make the difference for your organisation. We’d like to share some basic essentials which we’ve learned along the way and how we’ve applied that learning to our own business.
Though it may seem obvious, many companies which are technology-based tend to see their commercial world through a technology prism. This is nearly always a mistake because the commercialisation of technology is primarily an entrepreneurial exercise. In very simple terms, the idea of the ‘best technology’ must be defined in terms of the most commercially attractive technology for the end user and not defined purely in terms of its technical sophistication or the potential to win a technology prize.
It’s hard for a technologist to be unsentimental about technology development but that discipline lies at the heart of all successful technology monetisation. By applying strictly business filters, it becomes easier to impose a design freeze and avoid the inherent additional costs of continual tinkering and the dangers inherent in making the best the enemy of the good. It also addresses the essential truth that all new commercial energy technologies have marginal economics. Capex is the enemy and anything unnecessary which might increase Capex needs to be driven out of the planning process.
This raises the second point, which also returns us to one of our constant themes, which is to get your engineering support in the room at the earliest opportunity. https://luckeconsulting.com/2022/10/31/adding-immediate-value-why-you-need-you-need-lcts-right-from-the-start/ In the context of commercialising new technology there will be uncertainties around technology cost and performance particularly if, as is highly likely, the process involves integrating multiple technologies. If the required technical assurances cannot be provided, partners and financiers with take a conservative view on the risks inherent in such project grey areas and that will almost certainly translate into a higher Capex.
The question of project finance brings us to the third point. At LCTS, we have a portfolio of very exciting clients with a raft of innovative projects which are both technically viable and which will have a real impact on lowering emissions and delivering a cleaner and smarter energy future. One constant theme, however, is how challenging they find it to secure proper funding. This further emphasizes the need for projects and technologists to embrace an entrepreneurial mindset and that principle is something that LCTS has consciously adopted in its own business.
The energy world is changing and the nature of the support needed from an engineering consultancy is changing with it. We recognised that we have a lot of funding conversations and we are constantly talking to organisations and individuals looking to invest in a clean energy future. LCTS is not about to go into the project finance business but we certainly have the capability to step beyond the traditional value offering of an engineering consultancy and access our networks on behalf of our clients. Rather than wait for things to fall into place, we have resolved to take what we already do and turn into it additional value and a business-enabling opportunity for our clients. This is already happening and we anticipate some exciting outcomes.
By not waiting for things to happen, we touch on our final point. All successful projects have passion and dynamism at their core and we should never lose sight of the importance of the personal energy of all involved. Part of the entrepreneurial mindset is that, if things aren’t happening, those driving a project must find a way to make them happen and that’s how we see things at LCTS.
The Himalayan explorer, W. H Murray, summed it up:
“Concerning all acts of initiative or creation, there is one elementary truth…that the moment one definitely commits oneself, then Providence moves too. All sorts of things occur to help one that would otherwise never have occurred. A whole stream of events issues from the decision, raising in ones’ favour all manner of incidents and meetings and material assistance.”
This year will be a year of opportunity for the dynamic and the outcome-focused and we look forward to working with you.
Photo by Javier Quesada on Unsplash