Energy: doubt or certainty?
In my life as a consultant, I have encountered two prevalent types of executives in companies and institutions regarding their energy bills: those who express doubts and those who are certain. Expressing certainty leads to simple and even easy decisions, since the issue is “determined”.
hose who postulate uncertainty end up needing to configure scenarios and evaluate alternatives. This dilemma is essential for facing the increasingly complex energy landscape:
1. Relative prices between sources change
2. Source contracting models are different from each other
3. Risks associated with contracting volumes are also different
4. The time-frame for closing contracts is different between sources
5. The intensity of the operational plan may change over time
6. The strategy of “verticalizing” or “outsourcing” production activities may change
7. Investments in energy efficiency may change the consumption involved
8. The cost arbitration strategy between sources can make a big difference
9. The internal rate of return required for energy projects
10. The deadline set for projects to become viable
I have noticed, over decades, that those executives who have doubts end up doing better because they require studies to deal with the challenges posed. Those who are certain, from the start, end up taking much greater risks and most probably less competitive results.
