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Renewable Energies – Are we heading towards darker days? (A different perspective)

Renewable energies mean generation of power thru natural resources without adversely impacting the environment, like solar, wind, bio-mass, hydro and waste. Renewable energies are clean and green which are reducing our carbon footprints while supplying us energy. It also comes at competitive cost due to very low operating cost and various incentives from the Government. Renewable energies are continued to be on the agenda of United Nations, G7 and G20 for over several years as it has already established as a key source of energy. Most of the governments have come out with a dedicated policy initiatives, incentives, cheaper financing, research and development, investment in technologies, and other benefits to encourage setting up more and more capacities for renewable energies.

Wind power and Solar power that form significant part of renewable energies have its own inherent problems. They are dependent completely on nature. In case of no wind and no sun, these plants cannot produce power and thus creating huge uncertainties in the supply of uninterrupted power. Hence, one cannot depend upon them 100% and always need full ready power backup to meet their peak demand.

At present about 19.2%1 of total world electricity consumption come through renewables and remaining 78.3%1 and 2.5%1 come from traditional method (i.e. fossil fuels) and nuclear power respectively. Due to environment concern and to reduce carbon footprint, worldwide governments are focusing on generating more and more power through renewables. They are giving various incentives to encourage private producers to build capacities to generate power through renewables. As a result, gradually share of renewable energy is increasing year by year.

Since Governments are focusing on renewable energies and making them more affordable for consumers by offering incentives and other benefits, traditional power plants are finding it difficult to compete with them. Some Governments are also putting an obligation on State owned grids to draw certain dedicated percentage of power from renewable sources and give them priority over power generated through fossil fuels. Sometime in few developed countries, in case of good power supplies from renewable sources, supply of electricity increases over demand and thus traditional power plants remain idle. With this pace, traditional plants may gradually shut down and will create a huge demand supply gap in the long run. If Governments do not allow them to shut the plant, they will be in loss due to fixed cost which makes their power costlier due to absorption of fixed cost over lower capacity. If that be the case, what will happen to huge investment which has already gone in building the traditional power plants? There could be a scenario where we will have excess supply of electricity over demand.

Have we ever thought of that what will happen when the share of renewables increases from 19.2% to say, 60% of total world electricity consumption? Assuming a scenario that if we witness unfavorable wind and sun in any year, the world will have only 40% of power, it means 60% demand will not be met as it is dependent upon renewable power sources. This will have huge impact on the business as well as on people.

Should not we be thinking of a good mix of renewables and fossil fuels power to bring more certainty on availability of power that matches with demand?

Should we be killing traditional power plants by giving more and more incentives and benefits to renewables?

Should not we be thinking of a balanced approach which encourages all power sources while balancing environment concerns?

I hope that this must be on the agenda of UN, G7 and G20!

Author: C M Sharma

Twitter: @cmsharmag

  1. Source: Renewables 2016 Global Status Report
  2. Picture Source: raiot.in
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CFO, Are you still relevant?

Business scenario is changing rapidly. It is becoming more and more complex and global. About two decades ago, skills required for CFO largely were accounting, financial reporting, control, compliance and banking. Today, for being a successful CFO you need much more than that. Now business requires them to be a business enabler who can play strategic role along with CEO to grow the business and create value for all the stakeholders.

Besides above basic skills, some of the traits of successful CFOs are:

  • Understanding of business, customers, competition, and global market
  • Strategic thinking and ability to see larger picture in decision making process
  • Deal making capability to help business grow inorganically thru merger and acquisitions which is largely led by CFOs
  • Understanding of risk matrix and ability to insulate business from them. These risks are reputational, business, environmental, and regulatory. You need to create risk tolerance level so that business does not take too much risk
  • Good communication and presentation skills that will enable you to present yourself and your company better to the outside world, like investors, bankers, analysts, media, etc.
  • Good leadership skills so that you are able to motivate people in the organization to achieve its goal
  • Conflict management. CFOs are invariably seen as neutral person in the organization and hence they are well placed to resolve any inter-personal conflicts
  • Understanding of technology and new trends impacting your business
  • Skills to deal with regulatory bodies across the world where you have your business
  • Cross border taxation that helps to create compliant and most tax efficient structure for your global business
  • Understanding of culture and people sensitivities to help formulate and customize various policies
  • Use of analytics to help taking decisions based on facts and figures
  • Be a good listener, willing to ask uncomfortable questions and take stand without being arrogant
  • Strong on ethics and governance so that you can gain trust of all stakeholders
  • Keep your knowledge up to date and continuously looking for improvement

You should know that “Good CFOs are those who don’t get their companies or themselves into trouble and those who can get their companies out of trouble as CFO”.

Author: C M Sharma

Twitter: @cmsharmag

 

Startup – keep going or quit?

Over last few years we have seen craze for startups but it is very lonely at the top for the entrepreneurs as they have very few people whom they can approach for help or advice. This makes success rate of startup very low. Hence, the entrepreneurs need to be careful as they need to know how far they can go and when to call a quit.

Do you have a startup which is not working despite your best efforts? Here are few points which will help you in your decision-making process.

Are you in product or service that addresses any of customer’s pain points?

Is industry/market big enough?

Is your business scalable?

Is there any entry barrier? If not whether your product or service is distinctly better than others?

Do you have competent and motivated team?

Do you have adequate funding? How long your funding will last?

Do you have 1/3 years’ business plans? If yes, are you going as per your plan? If not, is negative deviation small?

Do you know what is not working? If yes, do you have ability and resources to fix it?

Sometime you need to be tactical to sustain your business longer without distracting from your end goal. Did you use these tactics? If not, you must try these.

Do you have timeline on when to quit? If yes, are you within your timeline?

If answer to above is yes, you should keep going. If answer is no, then you need to think of quitting. If you decide to quit it is not end of the world. It is also not a total failure. It is just that your idea is good but you are not the person who can execute it well. If so, you should think of passing it on to somebody else who can execute it well so that you can cherish your idea as being “visionary”.

Good luck!

Author: C M Sharma 

Twitter: @cmsharmag

Become a Balance Sheet Partner to your customers

The customer is the most important partner to the business. What does customer partnership really mean? Is it being able to solve shared problems and striving for brilliance in every communication? May be, but true customer partnership goes far beyond that. It is about caring for your customers, adding value to their business, enhancing their brand image and providing solutions at most effective cost.

True care comes not only from just talking and saying that we care. But it comes from your action and deed. Your talking will please customer momentarily but your action will last forever. You need to bring genuineness in your approach.

Adding value to customer’s business is crucial as it ensure long lasting relationship. Technology is proving to be a disruption for most businesses and changing the way business works. You need to keep pace with latest technology for innovation and to serve the need of your customers.

To earn customers’ loyalty, you need to be their brand ambassador. You need to talk to your network on all good things about the customers. However, if you find something not-so-good about your customers don’t talk behind their back. Instead, you need to talk to them directly in a nice manner. Believe me, customers always see thru your genuineness. They have means to know what you do behind their back.

You need to be conscious of customers’ cost pressure and their need to show better financial results and improved EPS (earning per share) quarter on quarter. You need to provide them maximum value at most optimum cost. You need to think long term before you decide on your price. You need to focus on innovation and value-add which will lead to higher margin to you as well as to your customers.

Once you are genuine, care for your customers’ brand and build trust, you gain their loyalty. Once you gain loyalty they value you as their Balance Sheet Partner. Any relationship which is built on trust and genuineness become everlasting and ensure more profitable business your way.

Last but not the least, if you take care of your customers, they will take care of your business.

Author: C M Sharma

Twitter: @CMSharmaG