The truth is that the buy-in of companies and governments and the funding of electrification investments across North America has opened the first and biggest of the doors, but the bar and jukebox weren’t waiting for us on the other side — there are some other doors to get through, and some of them are proving a little trickyDaniel Ludwin, Principal
- About this video
Funding electrification was the first hurdle. Discover four considerations utilities should bear in mind when tackling implementation for an electric future.
Oliver Wyman Takes On Series
In this video series, energy and natural resources experts share their take on how businesses can harness risk, turn climate intent into action, and lead in the age of acceleration.
The energy transition is great! It’s been difficult, the last decade, convincing governments and corporations to get on board, but finally momentum is growing, dollars are flowing, technologies are evolving rapidly, and the electric industry in particular is mobilized and unleashed to make it all happen.
Those at the cutting edge are asking only one question — ”How can we make it go faster?” Well, not exactly. I mean, it’s complicated. Sorry.
My name is Daniel Ludwin and as a civil engineer a long time ago, I fell in love with the ignored and invisible infrastructure beneath our feet and overhead. The unnoticed pipes and poles and buried concrete that makes our cities and countries work.
Even now that these things are getting more attention than ever before, I stand trying to balance between wanting them to be cheap to build, long-lasting, and simple, and, on the other hand, trying to figure out if doing something new is a good idea.
Now that I spend most of my time helping lead our North America Utilities Practice at Oliver Wyman, the ability to find that balance — for assets and also for the businesses that run them — is always in high demand.
The truth is that the buy-in of companies and governments and the funding of electrification investments across North America has opened the first and biggest of the doors, but the bar and jukebox weren’t waiting for us on the other side — there are some other doors to get through, and some of them are proving a little tricky. And, as much as we’d like to get to quick answers now that we’ve started moving... not quite.
In Maine, the proposal to build a large, new transmission line to export green power from Quebec to New England got blocked. Then, unblocked. Then, blocked. Then, unblocked. And it’s tempting to paint this as a purely “Not-In-My-Backyard” kind of issue, with opposition funded by entrenched local carbon emitters. But opposition is also genuine and heartfelt, and disenfranchising the people who are casting those votes... It’s not only dismissive, but it has implications for which segments of society are benefiting more or less from this transition. Not to mention some thorny environmental disagreements about what construction is spurring net-new renewable generation, or just moving it around to sell at a higher price. I have my opinions, but the most important is that this is not an isolated case — The more we want to build transmission to support electrification, the more this is going to keep coming up.
In another example, offshore wind is one of the most promising renewable technologies discussed in every policy plan across the world. Who can argue? Green power doesn’t take up land, it’s steadier than onshore renewables, and it’s proven technology you can start building today. And the US has correspondingly ambitious targets, supported by states along the coast. Auctions are hot, permitting is being streamlined, long-term power purchase agreements are being signed. All the best brains are focused on how to make this work right.
The joint ventures between local utilities keen to develop and overseas utilities with proven experience? They’ve proliferated. But then why have several experienced utilities and large energy corporations recently sought to sell their share or renegotiate their contracts? With so many people committed to making this work, how can a business investment in the future suddenly go so sour? And, is it a matter of money, or of less straightforward measures that will be needed to solve it? If this even needs solving, or is it all working as it should?
There is no silver bullet to these problems. If electrifying were simply a matter of climbing onto the bandwagon, it might be difficult, but it wouldn’t be complicated.
It helps to have an approach, though, and there are four lenses I would suggest using.
First, put yourself in context — who won in the 1970’s oil shock the way you’re trying to win now? Who didn’t? How about Australia, or Norway today? Who can you learn from?
Second, form your own opinions about how fast the change will happen — resist assuming that the announced targets surrounding you will actually be met on schedule.
Third, look around — and, if you’re leading the pack, ask yourself if you’re also outpacing your support. That may not be a bad thing, but it does require more planning.
And fourth, think creatively about how the systems tomorrow that surround you could be very different than the ones of the past decade. Making predictions is hard — get a running start.
This is exciting. No really, it is! It’s exciting! The messy reality of getting from here to there is what I love working through with my clients. And solving complicated problems is what unlocks real change and real transformation. And it’s unbelievable being right in the thick of it.
I’m Daniel Ludwin, and this is my take on our electric future.