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Energy: the value of difficult decisions

Energy: the value of difficult decisions

The risks associated with energy efficiency solutions, energy contracting, distributed generation - among others - have become very important in Brazil. For the simple fact that it is always necessary to compare a solution under study with the current one.

But what price reference use to evaluate the interest and convenience of accepting a new solution? The question seems obvious but it is not, and by far! Energy tariffs and prices, considering the whole range of alternatives have a "life of their own" in Brazil and their variation is beyond the control of who is contemplating their possibilities.

So the first step is to recognize the complexity involved. Those who take the initiative to treat the energy as a difficult challenge will probably require depth of analysis and finally have a better picture of the alternatives available to make well informed decisions.

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Matt Chester's picture
Matt Chester on December 4, 2018

You bring up some interesting points, Rafael. Can you provide from specific examples of instances where companies perhaps did not properly weigh the risks and what the consequences of doing so were?

Rafael Herzberg's picture
Rafael Herzberg on December 4, 2018

A good example is power contracting. 

The traditional way is locking a new power deal about a month before the ongoing contract ends.

The proposition I always come up with is checking power prices for future delivery well in advance and close a deal when there is a super sexy price on the table.

Differences are huge. Uusually in the 20% to 40% range. And this becomes important since the power account is usually a Top 5 one for industrial energy users, who spend USD Millions per year (medium sized companies).

At stake is the decision making process. Tradition is lower ranked managers following "blind" routines. My suggestion is looking at the big picture. It demands learning about the power business!

Matt Chester's picture
Matt Chester on December 4, 2018

At stake is the decision making process. Tradition is lower ranked managers following "blind" routines.

I think this part unfortunately resonates with people across all sorts of industries-- thanks for the reply!

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