We recently sat down with Jonathan Bell, Director of European Clean Energy Advisory at Altenex Energy, who leads Distributed Energy Resources (DER) and Direct Emissions advisory services. Bell discusses the rising corporate demand for onsite renewables across Europe, Altenex’s programmatic approach, and bringing value to late-stage engagements.
You recently transitioned from your role as Altenex Energy’s Director of Business Development to this newly created position, in which you lead Distributed Energy Resources and Direct Emissions advisory services. What led to the creation of this role?
The main driver was just a growing need that we’re seeing amongst the businesses that we’re working with, and that’s specifically around distributed energy resources and onsite solar. It was a bit of a natural decision for me because it’s coming back to what I might call my roots. Much of my career has been delivering wind and solar development, so this is very much coming back to this concept of being involved in the impact and implementation elements of the role, where I’ve been a part of building the business in Europe for the last couple of years now. And that’s been great fun.
What’s driving this increased corporate demand for onsite renewables?
Mainstream corporate businesses see more clearly than ever that they really do need to step up their efforts, they really do need to get engaged in a different manner. And I think we’re seeing more of the results of this. When people think about onsite solar, it’s actually quite visual – people understand it. They’ve seen solar on roofs; they know what we’re talking about, and they see it as being one of the easier concepts. But we are only still very much at the tip of the iceberg. There is so much opportunity to do more. There’s still a huge need to increase and accelerate in this area, so you’re going to see this everywhere over the next couple of years.
There has also been a real change in emphasis around the discussion on net zero in Europe both during the Covid crisis and now because of the Ukraine war. There’s an urgency, and we’re not just talking about the transition to net zero; we’re also now talking about supply and demand reduction and security of supply. These are really important factors and builds into the same business case.
Let’s talk challenges and complexities that Altenex is seeing as it pertains to corporate businesses trying to execute on DER strategies and targets.
Onsite solar and DER solutions are readily deliverable, but the complexities need to be appropriately addressed. Many of Altenex’s most recent engagements have come from experienced and sophisticated buyers and corporates, many of whom have had existing success with onsite and DER programs. However, they’ve seen a need for a more centralized approach, or what we term as Programmatic. For example, in some cases, we see department budgets are exceeding original estimations due to either internal resource allocation at local facilities or new recruitment for single projects. In addition, targets for achievement are being missed and resource investment is not realizing anticipated benefits. And importantly, we’re seeing a lot of key stakeholders moving roles due to market demands. There is a lack of capacity to deliver at a strategic level – consistently and efficiently.
We’ve seen businesses start onsite projects, looking at roof or ground-mount or perhaps carport solar, and on that journey realizing that they’re not reaching their original ambitions and targets. And when they see something not being achieved, what do they then do? Often, they will double down on investing into what they’re already doing as opposed to perhaps taking a step back, seeking advice, and understanding, ‘how might we find a more efficient approach?’ They apply more resources to the same problems or barriers, bring more employees on board, really make an extra effort to increase what they’re currently doing to achieve scale and capacity. But often this doesn’t bridge the disparity between reaching targets, the budget and resources allocated to this, and what’s actually being achieved. This has been a consistent and underlying theme.
What’s the mindset here as far as corporates doubling down on approaches that perhaps aren’t achieving targets and impact?
We see a sort of delegation to locality, meaning a delegation to local teams who hold budgets and provide engineering expertise, but aren’t necessarily local teams that are running a global or even European program for onsite solar delivery. This is an important distinction and consideration, often underlying why businesses aren’t achieving success at the scale they need.
There are reasons why we set up the services we’ve set up – there’s a need and we’ve been delivering at scale for the best part of a decade. We can see the pain points and can help clients consolidate under a structured programmatic approach. And, just as importantly, we offer the resources and capacity that most businesses are never going to want to invest into non-core delivery, however important, and particularly not available at a localized budget level.
It does sometimes take a little bit of a leap of faith to step back and bring an advisor on board. But when you look at it against the scale of programs we may be talking about, we’re talking about anywhere in the tens to hundreds of millions of Euros in investment for a mid-sized corporate business to do this across Europe, let alone globally. It’s a really significant investment, so why leave anything to chance, or delay on ensuring that impact is realized at this scale? Why not get really clear advice, credible support, and additional value from a business that can demonstrate delivery at scale, globally?
What are the implications of not taking that longer view, of taking that step back?
I think it’s a big part of why we’re not quite seeing the level of program delivery yet in Europe that we are seeing in the U.S. There’s a lot of capability, but people are reticent here. I think it is more about the disaggregation of business structure and a focus on locality and budget-holding as opposed to the programmatic procurement approach, which is very much about taking back control and realizing genuine value.
I also think that because onsite solar is a mature technology it’s seen as simple, so the assumption is it’s easy to deliver. When you start getting into engineering projects, people start to look at the engineering problem and look at the immediacy in front of them and they don’t take that step back to clearly align internally on the commercial.
Viewing onsite solar as a technical as opposed to commercial consideration is an issue. Some of the highest failure scenarios don’t come from technical internal capability but from a lack of clarification and alignment with and between internal and external stakeholders on the primary commercial considerations, both financial and legal – for example, who’s taking the risk, and where? What contract structures best suit our business model? And many more considerations. We see local project owners struggling to get signoff on projects from other internal stakeholders to reach Final Investment Decisions because they have not provisionally aligned on quality, cost, and risk provisions. So, what looks simple becomes unduly complex, and really quickly.
What are some of the most common reasons that a business would delay engaging an advisory team like Altenex?
This goes back to the idea that if something is seen as quite simple, then why would I bring on an advisor? Or, we can run an RFP, we don’t need you to tell us how to do that. There is some truth to this, but businesses may also have multiple teams from multiple departments and jurisdictions, working on multiple differing delivery models and scales of projects. Your challenge as a procurement department is ensuring that the delivery is consistent, that budgetary controls are managed, and that you can clearly demonstrate value. Sometimes it takes existing delivery attempts to really start to see these misalignments, and sometimes I think that can be a prohibitive area for our engagement – people kind of have to have that light switch on.
In short, what we find is a lot of the businesses coming to us are those that have already tried. They have incredibly capable teams, engineering and procurement departments, but they just don’t have the level of capability, capacity, and resources that we do and why would they? We work across multiple businesses, globally, in this area. We’re not just investing in our own European team – we’re investing much more broadly, globally, to ensure that we can deliver at scale. A lot of businesses are coming to us at different stages of progression, and we try to ensure that our services are flexible. That means that we can join them on the entire value chain consideration, whether that’s an existing program of delivery or starting from the strategy right at the beginning.
How critical is the alignment piece as far as internal and external stakeholders?
We’ve got a lot of experience across all of our service lines to focus on many considerations. And one area that we are really strong on is acting as a conduit to educate, manage, and translate between stakeholders, and that means internally between finance, treasury, engineering, procurement, and executive. We do this across the spectrum of sustainability, offsite renewables, energy optimization, and transport electrification. We’ve got a really solid approach, and we achieve that internal and external alignment as well, so we’re talking about how you’re working with those partners that are going to deliver for you externally.
You need to make sure that all stakeholders are aligned during the internal decision-making process so that you have a clear mandate to execute at the end of the commercial process. And that means that they can get the final investment decisions they are going to need, whether it’s a Capex or a PPA discussion – it doesn’t really matter. They’re all related to exposure to risk, so they’re making sure they’ve done the most efficient thing in the most aligned manner to ensure they can monitor and manage all the deliverables.
How does Altenex find additional value for a business in the case of a late-stage engagement?
We’ve placed a massive investment into our network of over 200 global developers, who are part of the Insights Platform, which is our digital renewables marketplace. And we engage with them regularly. We have analysts out there engaging on a daily basis with these developers to understand not just their pipelines, but their capabilities, and which markets they would align with – all of these considerations so that when someone comes to us, they know they can go to market even in a late-stage engagement and they will have full transparency.
We’re not just going to a few local developers that have approached us or have come with quotes. We’re genuinely able to go out to the market to see how you can ensure that you’re getting value, with due diligence, efficiencies, and cost considerations incorporated into that. And there are some great examples of where our team has really helped businesses – even at very late stages – find those efficiencies and prove value.
We have the ability to be flexible, but it’s also about the investment that we make as a business to ensure that we’ve got the right services to meet the need. We can offer a continuity of resources because businesses may lose local or external stakeholders, but we know we can backfill in lots of ways and be inventive about how we support them. It’s about trying to meet our clients on the journey and meet them at the point they’re at.
What are we going to see from the market as we head further into 2023, and what are Altenex’s plans to meet increasing corporate onsite demand?
The reality is that the energy market is changing radically and rapidly and in ways that we weren’t expecting at all. And it’s happened twice in the last four years to massive effect in Europe and across the globe as well. Businesses need to be looking at all of these changes. They need to align their stakeholders, get their strategy in place, and be clear on their commercial objectives.
We’re anticipating a significant increase in demand – we know it’s happening now with just about every business we speak doing something, particularly when it comes to DER and onsite solar. We’re focused on investing in and expanding our network of developers to make sure that we’ve got full access across all markets. We’ve got an excellent team of professionals with extensive years of experience and capability across global businesses who are able to deliver at these scales, and that’s something that we’ve invested heavily in.
We’re taking our industry-leading strategic support and translating that across Europe, and we’re getting the message out to businesses that their goals can be achieved within their desired time frames. I think you’re going to hear that Oscar-winning film reference quite a lot over the next year or so, which is that we need everything, everywhere, and all at once to meet net-zero targets.
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