Happy New Year!!
At VECKTA, we took the week off between Christmas and New Year to digest 2020 and recharge our batteries. We return refreshed, fired up and ready to take on the new year with positive energy and a commitment to develop a more sustainable, profitable and distributed energy future.
In addition to some socially distanced adventuring on bikes and skis with the fam, I managed to catch up on some reading. One article that stood out and resonated with me was by The Economist “How to get infrastructure right” on Jan 2.
“Politicians everywhere are calling for more infrastructure spending. Yet few industries have a worse record of coming through on time and on budget. If the incipient boom is to produce better results, governments and firms must learn to adopt best practice from around the world.”
To stimulate economies globally, governments are committing huge amounts of money. The U.S just signed off on another $900B spending bill and Joe Biden wants to commit another $2T to infrastructure spending when he becomes president. The EU also approved a $2.2 T budget for digital and energy investments. There are similar investments and commitments globally.
The article went on to say “cost overruns often exceed 25%, two thirds of bribery cases involve infrastructure deals and most projects’ time horizons are beyond that of politicians, voters” and business leaders. The article provided 2 universal lessons:
- Projects should be selected based on the highest payback and this should consider externalities including impacts of carbon and delays. “Selections should be carried out by bodies that are independent from those that build and run the assets.”
- Harness the private sector for access to in excess of $200 billion of funds waiting to be deployed as well, private invested projects are typically proven to be managed better. “That means deploying standardized contracts to give investors reasonable certainty of an adequate return.”
“If you benchmark public investment in over 100 countries, adopting best practices could make spending 33% more efficient.”
At VECKTA, we could not agree more. A more acute and urgent focus on climate change, the electrification of everything, digitization of our economies and a need for cost certainty, reliable, safe and socially responsible power (water, transport, communications…) is creating a unique and significant need for energy (and supporting) infrastructure projects to be deployed at scale.
In the energy industry, we see an energy consumer with an increasingly urgent need and desire but a frustration and lack of confidence in knowing where to turn or what to do next. In turn the supply chain (equipment providers, constructors and capital providers) are stuck operating in analog mode, fragmented and reactionary in a response to unique one off opportunities. Customization is difficult and deal flow slow and expensive—no one wins. Today, on average 30% of microgrid costs are soft costs, which makes projects infeasible from inception.
There has been to date no integrated and independent marketplace for the energy industry. At VECKTA, we are changing that and empowering collaboration between energy users and the supply chain to assess, finance, procure, and deploy customized onsite energy systems. Today through our approach we are seeing 10x improvements over status quo methods. We are developing the integrated market platform for the energy transition which overcomes the challenges identified in the article. Today VECKTA:
- provides the independent platform, repeatable process and tools to quickly and accurately assess and design your customized and optimized energy solution specific to your needs, 90% quicker and more cost effectively than business as usual practices.
- assesses and prioritizes solutions across your portfolio of assets, considering technical and financial metrics and key externalities (cost of carbon, carbon reductions, technology prices, fuel prices, cost of outages etc) over the life of your asset(s).
- ensures the systems will operate and perform as designed by modelling with real-time equipment performance specifications and prices, captured through our market platform participants.
- delivers an integrated, enjoyable and intuitive interface whereby everyone associated with a project can work from one consistent and coordinated source of truth.
In 2021 we are focused on developing the “standardized contracting” side of the market which will empower energy users and the supply chain to take projects through the “cone of uncertainty” from inception to increasingly more detailed outputs. The energy user (project owner) will interact with the supply chain to tender, procure, finance, deploy and operate the contracted solutions. By minimizing the soft costs throughout the project lifecycle, we will ensure that a greater volume of projects are considered and the most viable and greatest return on investment projects are deployed at pace, on time, on budget and operated as planned.
This will create a flywheel effect for industry, more projects, lower costs for the energy user (combined with the benefits of an customized energy solution – energy independence and reliability, improved power quality, social license, sustainable and profitable operations), as a result of lower costs of customer acquisition and project planning for the supply chain, creating more demand and so on. We are obsessed with developing a more profitable, sustainable and distributed energy future.
Today’s low interest rates mean financing is cheap and the payback from developing the right projects is significant. So, if you are considering an alternative energy system there is no better time. 2021 is going to be a pivotal and exciting year and we look forward to collaborating with each and every one of you to achieve our respective goals and visions of success.
On a personal note, as a global citizen, business leader, family member, tax payer and someone who loves to spend time in nature, I want to see the money earmarked for infrastructure and energy investments well spent. I want to see investments occuring in an efficient, repeatable, cost effective, clean, safe and reliable way that is customized to provide the greatest return on investment for generations to come, and I am committed to empowering that.
Written By Gareth Evans
Photo credits: (Louis Maniquet / Unsplash)
