User Manual

3
Harvard Business Review Analytic Services
FIGURE 2
WHA
T LEADERS ARE WORRIED ABOUT
R
espondents ranking each of the following 8 to 10 on a 10-point scale
Interruptions from weather
-related power outages
Interruptions from cyberattacks on utilities and/
or power grids
Increasing energy costs from the adoption of digital technologies and devices
(e.g
., robotics, med tech devices, IoT applications)
Competitive pressures to reduce operating costs, including for energ
y
Public opinion about sustainable energy use
The effect of fluctuating energy prices on operating costs
76%
76%
55%
84%
63%
83%
SOURCE: HARV
ARD BUSINESS REVIEW ANALYTIC SERVICES SURVEY, APRIL 2017
solar energy is less expensive than other
sources,” he says. “The transformation
can move as fast as the transition from
landlines to cell phones. Remember,
after the tipping point, it only took
about 10 years for cars to displace horse-
drawn carriages.”
Richard DiClaudio, president and CEO
of the Energy Innovation Center in
Pittsburgh, believes that the declining
costs of renewable energy will fuel the
growth of microgrids—small networks
of electricity users with a local source
of power that can function independent
of the power grid. He also argues that
the grid is essentially a one-size-ts-
all solution that made sense a hundred
years ago when the country was trying
to provide power to everyone across the
country’s vast landmass.
Today, however, many parts of the
U.S. are populated densely enough to
make microgrids a potent alternative to
the grid. As businesses and consumers
realize they can generate their own
power, they are likely to combine
forces through microgrids to achieve
maximum eciency. Cyberthreats
will also accelerate the adoption of
microgrids, according to DiClaudio:
“When the power stays on in a
neighborhood while the lights go out
everywhere else, it won’t be very long
before people really understand the
advantage of microgrids.”
Financial industries will also exert
signicant inuence on the use of both
renewable energy and microgrids.
Andrew Winston, author of The Big
Pivot, says that banks are highly unlikely
to loan money for coal-burning power
plants and investors aren’t likely to
put money into them either. DiClaudio
believes that insurance companies are
on the verge of expecting businesses to
use microgrids or face large premiums
for business interruption insurance.
Humayun Tai, a senior partner at
McKinsey & Company, sees employees
as a key factor driving the organizations
that they work for to become more
energy ecient. Just as people expected
their employers to embrace new
technologies such as social media, they
will expect them to use energy eciency
tools when they start to become
common at home. “Voice-activated
apps that are connected to smart energy
devices in homes will allow people to
manage their energy use with a few
verbal commands,” he says. “That will
drive energy eciency at home and
businesses will feel obligated to become
more sophisticated in their energy use.”
What Organizations Are—
and Aren’t—Doing
Organizational leaders are worried
about energy. The most pressing
concerns are uctuating energy
prices and competitive pressures to
reduce costs. Business interruptions
from weather-related events and the
specter of cyberattacks on the grid
are also gnawing worries, with 76% of
respondents strongly agreeing these are
a major source of concern. FIGURE 2
However, most organizations aren’t
acting on their concerns, at least to
a signicant degree. Only 28% of
respondents say their organizations
have resiliency plans in place. Only 19%
say their organization has an energy
procurement strategy in place that has
strong senior management support.
Nearly 50% of respondents say their
organizations pursue energy reduction
opportunities on an ad hoc basis.
TODAY, MANY PARTS
OF THE U.S. ARE
POPULATED DENSELY
ENOUGH TO MAKE
MICROGRIDS A
POTENT ALTERNATIVE
TO THE GRID.