The new energy ROI:



We are in a new era – an era characterized by change, complexity and volatility.

The 20th century model of centralized generation is being replaced. Energy patterns are changing – between different fossil fuels, between fuel and electricity, between peak and off peak, between summer and winter, between developed and developing countries. Everyone is grappling with change. With the challenge of developing and integrating new supply technologies. With new distribution channels. With new types of demand.

This is a world of risk. Technology risk as new low-carbon power sources mature. Integration risk as smart grids and power storage are rolled out. Supply risk as new bioenergy and biochemical pathways fight for feedstock. Commodity risk as unforeseen hydrocarbon abundance meets soaring energy demand. Policy risk, as new approaches threaten, and old ones fight back; governments fall and public finances dry up. Geopolitical risks in an unstable, hyper-connected world.

Energy companies, policy-makers and regulators have no choice but to plant their feet among these shifting sands. They have to manage their financial, social and political capital. So too they have to manage their “natural capital”, increasingly under the spotlight in a resource-constrained world. Where to commit funds? Where to place bets? What to sweep away? What to keep? Between now and 2020 over three trillion dollars will be invested worldwide in clean infrastructure.

The key questions are about risk. How does one plan in such a volatile environment? How does one maintain flexibility to take advantage of opportunities? How does one avoid catastrophic outcomes? How does one position oneself to protect against the downside while holding on to the upside? What does one need to know? How does one react faster than the next person?


We’re talking about Resilience, Optionality and Intelligence.

Resilience: With both the frequency and cost of disruption on the increase, energy and water systems need to have resilience built in from the start. Resilience has value but who should pay for it?

Options: The more volatile the world, the more valuable options will be. Zero-fuel-cost energy; distributed and modular generation; power storage; interconnects; electric vehicles; energy efficiency, smart grid. All offer option value – but how does one maximize it, and who captures it?

Intelligence: New technologies offer dramatically better resource use and precision control of clean infrastructure. But data volumes are exploding. How do you move from data to intelligence and from intelligence to insight?

It is time to stop talking of what individual new energy technologies need from us, and start working on what we need from a new energy system: Resilience, Optionality, Intelligence: the new energy ROI.