21 Nov 2017
Alumni Peer into the Future of EnergyRe: Thomas Eisenmann; Jeffrey Rayportby Margie KelleyTopics:
Justin Dawe (MBA 2007), president, Scoot Networks
(photo courtesy of Scoot Networks)
What do you think the state of the energy industry will be in 2030?
HBS students in the Energy and Environment Club asked alumni working in the field to answer that question during two recent networking receptions. Their answers suggest that clean power will take off over the next decade or so, but hydrocarbon fuels will remain dominant.
The E & E Club teamed up with the Business and Environment Initiative (BEI) to host the receptions—one in New York City and the other in San Francisco—where about 50 students and alumni shared their insights on the future of the energy and clean-tech sectors.
“It was a chance for current students to make connections with alumni working in these industries, and find inspiration,” says Jennifer Nash, director of the BEI, which facilitates collaboration among students, alumni, faculty, and environmental industry leaders. “We invited several of our alumni guests to host each event and give a short talk, to paint a picture of the future for energy, so our current students can bring those ideas back to HBS and make the best use of their time here.”
The speakers’ advice and industry predictions, in their own words, follow below.
Justin Dawe (MBA 2007)
President, Scoot Networks
“The more we use renewables and storage, the cheaper they get. That’s a really profound thing, when you think about what it means for building an economy that works for everyone. Whenever an economy is rooted in a technology of scarcity, like fossil fuels, and there’s not enough, you get what we have today, namely, impoverished outcomes for most of humanity. If you want a society of abundance, you have to build solutions using technologies of abundance—things that get cheaper the more we collectively use them, and that also have no natural limits on how much you can use them—things like computation, communication, biotechnology, renewable energy, and energy storage.
“The environment and human well-being are way bigger than the electrical grid, way bigger than energy use, bigger than climate change. How can we use all of these tools of abundance to create solutions of abundance?
“What we do at Scoot is share electric vehicles. We started with little red scooters, with a 10-mile range; two years later we ordered little red scooters, with 20 miles of range; and our next shipment is little red scooters, with a 60-mile range. In the spring, we’ll have four-wheelers, with nice touches like windows you can operate and with a heater and that have a 60-mile range, and cost us less than those first scooters with a 10-mile range. That’s coming. Fast, fun, affordable mobility for everyone, using technologies of abundance: smartphones, renewable energy, and energy storage. And we’re hiring.”
Phil Rettger (MBA 1985)
Cofounder & CEO, Aetherix Corp.
“I’ve been developing renewable electricity projects for over 35 years and have seen massive changes in electricity technologies and costs. I don’t know what our energy system will look like in the future, but the future will be better than we can imagine because technology is going to improve, and the rate of improvement is going to be faster than anything we’ve experienced in the past. Solar is going to get cheaper, wind is going to get cheaper, and storage is going to get cheaper.
“Coal is not going to get developed, because it will be more costly than the alternatives.
Greenhouse gases are going to be an issue, but economics will be the primary factor driving out coal. The transportation system is going to get more electrified, both because of the greenhouse-gas issue and economics.
“Here’s an interesting piece of data: The size of the storage market for transportation is potentially 10 times the size of the storage market for the grid. If we care about greenhouse gases, we have to care about the transportation market—and we have to electrify it. And to do that, we have to solve the storage issue.
“So, given that technology is going to change, I think the most important things to learn at HBS are how to manage teams and interface with others in the organization. While technology will change, the need to manage people will not. Study interpersonal relations, finance, and change management.”
Joseph Santo (MBA 2017)
Business Development, Distributed Energy, NextEra Energy Resources
“I work in distributed energy at NextEra Energy, which includes “behind the meter” storage and distributed solar generation. When you have an oil company saying that, by 2030, one-third of all car sales are going to be electric vehicles [EVs]—an oil company actually admitting that to themselves and to the public—then real change is afoot.
“When we have one-third of all new car sales as EVs, what does that mean? Well, you have a massive production of lithium-ion batteries––that’s the technology of choice today––which brings scale costs way down. So, as EVs grow, that’s going to drive down lithium-ion prices.
“You’re going to have a huge demand for electricity. Utilities love having EVs on the road. It’s the first exciting thing they’ve seen in recent years, where you have the entire grid changing and the demand curve changing with the electrification of transportation. It’s also happening in rail and in other forms of transport.
“I recommend a class at HBS by Tom Eisenmann and Jeffrey Rayport called Scaling Technology Ventures. I think taking that class was one of the most important things, other than BEI and the Energy & Environment Club, that I did while at HBS. The class can help those interested in the energy sector learn lessons from the tech industry. With distributed energy resources, we need to leverage technology to coordinate a fleet of distributed assets and stabilize the grid as intermittent renewables continue to come down in cost. That feat, to change the way our world is powered, is undoubtedly a tech venture.”
Cecily Kovatch (MBA 2002)
Founder, Fueled for Growth
“I’m an independent consultant in the energy industry. What’s energy going to look like in 2030? I think about that in terms of megatrends. Urbanization is a megatrend, especially in Asia and Africa. Those areas are not tied into an existing hydrocarbon infrastructure. They have the opportunity to do something completely different and new, so we need to keep an eye on what those communities do.
“Another big area is the Caribbean, where I do quite a bit of work. As sea levels rise, those island nations could be entirely wiped out, so they are extremely focused on renewable energy sources. Aruba, for instance, has a goal of achieving 100% renewable energy by 2020. They are already about 60 percent of the way. How are they doing that? It’s mainly solar and wind. They are also looking at algae. But, to get to that next 40 percent, it’s going to take some really creative ideas that probably don’t exist yet.
“Some of the other big megatrends are AI and autonomous cars, and how they will affect the transportation sector. We also have drones, and when we’re delivering packages and using drones instead of trucks on the highway, it’s really going to change the need for [fossil] fuel, as transportation is one of the largest users of petroleum products.”
Robert Tichio (MBA 2005)
“I’m partner and managing director at Riverstone Holdings, one of the world’s largest private equity firms focused on the energy sector. My efforts at this point are exclusively on our upstream oil and gas investment program, which represent around 40 percent of our committed and invested capital.
“To answer the question of what the industry will look like in 2030, I’ll say first that we at Riverstone have made nearly 150 investments totaling some $35 billion in capital, and that gives us certain unique vantage points to evaluate what is happening in the industry today.
“First and foremost, what we see is an incredible amount of innovation throughout the energy sector. We see the unit price of delivered energy continue to drive lower for a variety of reasons that are too detailed to address here. But a principal effect of that trend as it relates to radical change in the industry is that, from a policy or social perspective, there’s going to have to be either incredible sacrifice or economic incentive/transfer payments provided by governments, to encourage industries and consumers to displace traditional hydrocarbons as the primary source for energy, particularly for large scale transportation, for at least the next 10 to 15 years. We think, and I personally believe, that traditional demand for hydrocarbons will continue to grow, even as technology and adoption of alternative sources advance; the scale and existing network effect of traditional fuel sources is simply too large to dismantle in any short period of time.
“To answer the second question, on which courses were most relevant or germane to my professional undertakings, I’ll first frame the answer with saying that I went to business school without having taken any business courses previously. So, for me, the two courses that had the most impact were Large-Scale Investment with Ben Esty, and Entrepreneurial Finance with Bill Sahlman. I think every day about incentives (societal and individual); how to structure organizations; how organizations are built to create certain behaviors; and how they can succeed or fail. Both of those courses addressed those themes in nearly every module.”
Jackson Lehr (MBA 2007)
Director, Distributed Energy Development, National Grid
“I genuinely believe that, by 2030, the world will have recognized the urgency of the climate change problem. I think the best analogy for the state of the industry, once that realization has set in, is aerospace in the 1960s and the moon shot, where there’s a real problem and everyone knows there’s a real problem and it’s not just the US and the Soviet Union doing their own thing, but it’s the world trying to solve that problem.
“There will be enough symptoms that will start to emerge that will force the discussion as well as the plodding and painful policy process. And we’ll get there and the world will be a different place in 2030.
“The energy industry could be a tremendously exciting place to be. It’s going to play a central role that will help make or break the future of the planet in a relatively short time.”
Class of MBA 2007, Section J
Class of MBA 1985, Section E
Class of MBA 2017, Section J
Class of MBA 2002, Section D
Class of MBA 2005, Section I
Class of MBA 2007, Section G