CleanTech Development

Small Medium Enterprise Is Grossly Under-Served In Energy

I talk and write about transformational shift in energy to the low-carbon economy, new energy paradigm.

I can appreciate that the topic is not exactly table-talk-worthy over dinners with family and friends, but it is something that will effect everyone, at some point in the coming years to decades.

Unlike COVID19, there are no daily alerts on how many deaths attributed to climate change or how many businesses shut down because of it. There are stories on effects from it, like massive storms, floods, fires consuming entire communities.

There may come a time where there will be, but my hunch is that it would be too late to prevent the wholesale change that will come with it.

I remember when I was a university student, there are concepts, or I would call them the underpinning foundations, that we come to believe exist under the world economy.

Here’s a quick example. In university, I had this false understanding that businesses generally fit into nice neat buckets of what companies offer. I thought that companies organized themselves in these buckets and competed in very linear structures. It was interesting to me that a company that does garbage collection could also be in designing and building utility infrastructure, while another garbage collection company would offer something different like power generation business. My point is that I learned quickly that the market is not only free of choice by the consumers, but the sellers would pick any machination they see fit to get the sale.

I also learned pretty early on that businesses take one of two paths, and sometimes unknowingly switch. You are either chasing the leading companies in a race to the bottom on low-cost option selling, or you are selling a value premium that allows you to male margins that others are wiling to pay… because your option is either customized or unique enough that others can’t copy it very easily.

The problem in energy is that from the start of energy systems they have been developing larger more monolithic energy systems that were driven by institutions rather than individual end users.

For 100 years, that monolithic system has grown and grown so large that it is virtually impossible to penetrate this low-cost option solution with better solutions… until now.

Imagine if you believe that you are a low-cost option player, and you believe that end users have no other choice, you make decisions in your cost structure that supports that assumption. For decades, power generation systems and distributors in regulated markets allowed the cost to rise and rise to the point where energy has become a much larger portion of a typical family’s energy costs than just decades ago.

For families, this increased cost isn’t really a choice is it. No one can expect to survive personally and financially if they are not connected to society through the internet, and yet as the telecom industry went through its upheaval decades ago, we know that the net effect on energy was that everyone needed more to stay connected. So, there really isn’t a choice about energy.

Let’s consider businesses and how they’re impacted by growing energy costs. As energy costs have become a larger and larger portion of their inputs for people and for products, the reality is that only larger companies, with greater overall purchasing power have survived well, and while not necessarily because of energy costs, the trend is that smaller businesses can’t absorb the costs and be as cost competitive vs large ones.

It’s an interesting conundrum. Businesses that think they’re providing low-cost products are causing expenses to be too high for smaller businesses to survive.

Every business will and do complain about energy costs, but only the large businesses can really do something about it, because just from an energy perspective alone, they have enough purchasing power to hire sustainability and energy leads within their organizations, but the smaller business cannot.

In my opinion, small medium enterprise have suffered greatly by rising energy costs, because it further enables larger businesses to stay more competitive than the smaller ones, and perpetuate the concept that smaller businesses at some point need to sell to larger ones to become successful.

In a time where people can run any business out of anywhere with an internet connection, it’s interesting to me that the small business still can’t wrestle itself away from ever increasing and crippling input like energy costs.

Where is the energy renaissance that levels the playing field as telecom did?

While I believe that the days are numbered for expensive energy systems, I think the audience that most needs to appreciate the need to shift to the new energy paradigm quicker is small medium enterprise (SMEs).

In my opinion, they are underserved as a customer class. They don’t have the purchasing power and economy of scale to hire the resources to help them better understand how to deal with energy. They live off the old paradigm and try to chase the large companies but with no ability to become cost competitive. And for the companies trying the value premium route, they just don’t have the competitive energy inputs at their disposal.

I am working to educate and arm the audience of SMEs to become our global industry leaders. I want to become the Trusted Advisor to those companies that will improve our quality of life, and get off the track of old energy paradigm and thrive in the new.

I have never met a more deserving group of job creators, GDP growers, so abused by the complacency of staying in the old paradigm.

When I look out into the new energy paradigm, SMEs benefit the most because they are the most innovative, drive job creation, are nimble and bring economic prowess to the most remote community.

If telecom was the enabler of opportunity for SMEs, energy has been the shackles for them.

If there is any test for the success of the new energy paradigm and all that comes with it, it will be when SMEs have removed energy from being their cost input and turned into their enablers.