The year 2050 is a milestone for a few reasons; the world population will exceed 10 billion, Venice will be flooded due to rising ocean water level, humans will have set foot on Mars, and the world energy sector will have achieved net zero emissions.
Despite the enormity of everything listed above, the latter on that list will arguably be mankind’s greatest achievement considering how imperative it is to preserve the habitability of Earth.
At the forefront of this mission to achieve net zero emissions by 2050 lie energy and utility companies. The challenge in front of these industries is great, but the urgency to act is greater. Industry groups have made clear that the path to decarbonizing the world economy is energy from cleaner sources and more available energy to underserved communities. As Edison Electric Institute has stated, “For us, the path forward is clear, and the path forward is clean.”
Companies, trade groups, governments, and private institutions have already begun mapping their individual contributions to the net zero roadmap, and there are three common challenges that must be addressed by all:
- Developing an executable long-range plan using bi-value decisioning
- Strategically planning and shaping the workforce
- Effectively deploying the large capital investments provisioned to solve this challenge
1. Developing an Executable Long-Range Plan Using Bi-Value Decisioning
Since founded, energy companies have been driven by strictly financial decision-making, but the social and environmental responsibilities are forcing a pivot to bi-value decisioning that puts equal weight on both financial viability and environmental sustainability.
Executives need to evaluate, plan, and execute initiatives with dual focus on the bottom line and the carbon footprint, determining which initiatives to deploy resources towards and what impact they will make on both.
Some energy and utilities companies are expanding into renewable energy through solar, wind, and hydro power, many are exploring carbon capture for natural gas, nuclear power, and carbon capture and sequestration (CCS) of coal. Delving even deeper into this, precombustion carbon capture is more efficient than post, but many facilities aren’t designed to accommodate this – so, with so many options on the table, where do investments go and how do you get that extra-wide, holistic view?
A connected cloud technology stack is the answer that most utility and energy companies are turning to. The right software enables executives to track and project ESG related KPIs alongside the standard business plan KPIs for an optimal view from now thru 2050.
2. Strategically Planning & Shaping A Workforce Designed for the Future of Energy
The workforce that makes up the energy industry is one of the more highly technically skilled and motivated sets of workforces across the globe. As the advanced technologies that drive decarbonization get deployed, reshaping and reskilling the workforce will be of the utmost importance.
According to IEA’s Net-Zero By 2050 report, an additional 14 million workers will be required in just the next 7 years. Effectively, strategically planning for this workforce becomes an imperative across the industry.
Reskilling typically takes less than 6 months and can have varying costs associated with it, but, especially now due to the competitive talent market, it can cost significantly less than hiring a brand-new employee pre-equipped with the skills needed.
In an often-overlooked turn of events, reskilling employees can be incredibly beneficial for employers in more ways than saving capital. It actually boosts retention, elevates company morale, and can improve company reputation.
Not every employee can be re- or upskilled, though, but at what point is it too costly? There’s also certainly a need for specialized individuals who have longer-term training to lead and to bring more in-depth knowledge.
To handle this deluge of changes in an efficient, cost-effective, and advantageous manner, organizational stakeholders need to quickly see any and all impacts when deriving a hiring plan. Silos exist and breaking them down is necessary to strategically plan for the workforce of the future.
Driving the forward-looking workforce plan into the business plan allows executives insight into the shape of their workforce, not just the size of it, which is something that can’t be done using out-of-date spreadsheets being passed between HR and the various departments.
3. Deploying Large Capital Investments on New Technologies
Both public and private capital is readily available to the energy industry to undertake the challenge of achieving net zero by 2050. While very exciting, and necessary to achieve the desired end state, the stewardship to deploy these funds places a larger demand on the operations, finance, engineering, and strategy organizations within a company.
Efficiently modeling various scenarios is necessary for an organization to determine which set of strategic initiatives provide the most value for the investment. The ability to evaluate multiple paths forward and determine the most effective route across finance, ESG, workforce, and operational capacity is crucial to both meeting the 2035 and 2050 goals while continuing to run a profitable business.
The Answer to these Challenges: Moving to Scalable, Uniform, Connected Tech Stacks
Up until recent years, it was a pretty safe bet to say that each energy company’s tech stack was several extensive, homegrown legacy systems cobbled together with each acquisition by that one guy in IT who knows everything. Not to knock ‘that one guy in IT,’ Gary’s great, but if Gary got hit by a bus the entire infrastructure blueprint would be lost.
On top of all that, many business units feature their own operating model, making it challenging to determine the value delivered to customers or stakeholders across departments.
One of the most efficient ways to reach 2050 goals smartly and efficiently is through a scalable, uniform tech stack that leverages the best possible cloud software for each department. Providing your business units with the technology that best supports their practices is a game changer that leads to operational efficiency, increased effectiveness, and better alignment in cross-departmental initiatives.
Let’s take a quick closer look at a stack that includes Anaplan, DocuSign, OneStream, MuleSoft, and Coupa.
Anaplan can provide better planning, analytical views, scenario planning, flexibility, and insight. Use cases range across the board:
- Corporate FP&A or consolidations
- Treasury, Tax, Regulatory and alternate reporting
- Strategic Workforce planning
- Operational planning at all types of generation facilities
- Rate case analysis
- Capital planning and approvals
- Driver Based Project planning and approvals, merger/acquisition and divestiture modeling and analysis
OneStream is ideal for accountants who need to consolidate numerous tax challenges while DocuSign can keep track of contracts from inception to final signature to filing, whether they be from unions, states, government, towns, cities, customers, other regulated utility companies, merchants, or private utility service providers.
Coupa can give clients the insights they need to keep their supply chains moving even in a difficult economic climate and MuleSoft ties everything together to create the ultra-necessary Single Source of Truth (SSOT) that allows leaders to steer the ship.
Smart, efficient, connected – the advantageous path to net-zero emissions by 2050.
Spaulding Ridge Can Help Companies Reach Their 2050 Net-Zero Emissions Goals
Spaulding Ridge is an advisory and implementation firm that specializes in scalable, best-in-cloud technology that transforms the way companies do business. The energy industry has unique and exciting challenges underway, many of which could benefit from advancements in cloud software.
We can put together a full stack with completely integrable technology to support the energy industries’ needs as they power our way to a better and cleaner planet.
Questions? Reach out to Eric Maloni to develop a modern stack to reach your 2050 net-zero goals.
Director, Spaulding Ridge
About the Author
Eric focuses on providing financial transformational solutions to companies in the energy industry driving strategies to deliver more effective planning solutions. Eric has an extensive background in various capacities in the energy industry, most heavily in the commercial nuclear space. Prior to his civilian profession, Eric served in the United States Navy on nuclear submarines and received his Bachelor’s degree in nuclear engineering and holds an MBA from the University of Iowa.