A square peg into a round hole

The art of taking the rough road

No pain no gain. This has become the leading sentence of today’s bodybuilders, life style coaches and quite a representative Internet phenomenon. But does it stand also for the business?

I read from a paper last week that the business leaders get more and more points in job evaluation based on their looks and level of their athletics. The actual competitiveness is at stake. Career experts are worried that being good in one’s job will become somewhat useless at the brand driven job market.

On the other hand if you maintain a sporty look, perhaps you actually find yourself from the gym or the trails. Things often seem to turn out how you decide them to be.

I actually just bought my first integrated heart beat monitor and GPS running watch. Just to fight the trend I chose the ugly one in order to not start wearing it during daytime. Also saved a few bucks there. Still I’m hoping the new smart gadget will help me nail my next marathon in record speed. This is self-suggestion.

Now let me ask something. What do you think happens if a utility starts to make a few small investments into solar power?

Gotcha!

However hippie and cool it might be, the renewable energy is pain in the ass for utilities. But hey – No pain no gain. Today there seems to be more of that pain in sight.

I mean this simple truth: for the CEO of any business it is essential the company returns profit. There needs to be more than butter on that bread.

But where is that sweet spot? For example Fortum has its pockets full of cash after selling its grids two years back, but seemingly it still lacks a brainy idea of what to do with that pile of bucks.

They have undoubtedly wise people there, so it’s quite interesting to see where they find the future of their energy business to be.

Something has already happened. They already published their offer to by a Polish energy company with a bit above 100 million euros. This is of course a tiny portion of the two and a half billion cake they made with selling their grid businesses.

I wouldn’t go and hit the jungle drum yet based on that.

Where to put that cash?

This is not only for Fortum but I guess the question everyone is asking. Where’s the future profit?

An active discussion has emerged how electricity prices are at all time low and therefore some well-maintained power plants are soon taken off the market.  Nuclear power plants could be taken off line if the market forecast does not change.

The overall market prices are low. Ok, we got that. But at the same time we see a different phenomenon. Last week we witnessed the highest electricity balancing power price in the history in Finland. Could this be an opportunity to seize?

The all time high price – three thousand euros for megawatt-hour makes three euros for kWh. So even if I was allowed to participate to the balancing market with my imaginary 10 kW diesel generator, I would have made only 30 euros during that one hour of driving the machine like crazy to keep the lights on in Finland – minus the diesel cost. Doesn’t look that promising.

The average price on that balancing market has been 35,60 euros for regulating up, and 24,48 euros for regulating down. It seems flexibility is not yet valued in thousands most of the time.

Putting the money in wind power in Sweden is still an option. Actually Fortum is also doing it. Investing in wind power in Sweden is by the way excellent politics to support our energy intensive industry in Finland through lower electricity prices. Fortum is also investing in wind power in Russia.

This is however no news, since Fortum CEO stated already last September quite clearly that they will put their billions in solar, wind and biomass.

It seems renewables are their guess of the future business.

What about the system?

So Fortum got rid of their grid business and are investing in renewable power generation.

If we a bit boldly draw a straight line between these actions, we can conclude, that:

1. There are vast opportunities in the renewable sector.
2. Energy companies are investing in renewables.
3. Lots of renewables mean lots of headache to the electricity grid owners.
4. Utility companies are selling their grids.

It is always painful to find yourself outside your comfort zone. Now the question is, who will be the one taking care of the inconveniency of sustaining our energy system also in the future?

Vivid discussion has been on going in how energy storage will be the missing piece in the puzzle. I’d argue that we have found the piece. We have it. Batteries are becoming cheaper as we speak. LNG has found it’s way to the Finnish shores and even the district heating is said to provide flexibility to the energy system in the future.

Right now to me the problem is not that the missing piece of the energy puzzle would be missing. More like it’s a square peg that we are trying to smash into this round black hole that we call energy markets.

Active

If it would be one word to describe the future smart energy system it would be that one. If you don’t believe me see this report from the national Smart Grids and Energy Markets program. It says active all over the place.

Every single point in the network from wind turbines to that old stubborn man in the forest hut is becoming an active part of our clean and smart energy future.

Great. But is it enough to make sure the lights will be on in the renewable future? If we succeed, there’s plenty of market for our know-how.

Are we able to pull this through? And quite importantly: is there any incentive in doing so?

Will the pain of today’s energy debate give birth to gains in the future?