Renewables

and speed of information exchange.

Managing information, programs and applications will require significant changes in staffing, skill requirements and core “utility” processes such as resource planning, system operations, and distribution engineering.

Stronger relationships between consumers, utilities and the channel partners who support them are necessary.

Legislation and regulation should remove barriers for utility participation and provide a strong framework for incremental investment. And that’s only possible with a shift in consumer behavior, based on more information and options, and trust-based relationships with utilities and other partners, reinforced by community interaction.

With this amount of parallel activity and the scope of entities involved, solutions cannot come entirely from utilities, although they are necessary components of any solution and ideally positioned for leadership roles.

Each utility, community and regulatory group will need to reach consensus on what can be done and how fast. Structuring that dialog is an effort in itself, but the discussion has fundamentally shifted from “why” to “how.” With a structured approach, involvement by many parties, and leadership from utilities, the potential of efficiency will be realized more quickly than currently imagined. (Visit www.elp. com for more on energy efficiency.)

 

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Some companies have already recognized the challenge and opportunity. Phil Ribbeck, director, LNG North America for Repsol YPF, said, “If there are other markets that have incentives that are greater than the market that you’re going to with your LNG initially, why are you going to supply a guy for less money?” Repsol YPF is backing (75 percent) Canaport LNG, a project sited in Saint John, New Brunswick, Canada, with Irving Oil Ltd. ( 25 percent).

The super majors have a strong position in regasification. They also have sophisticated marketing and trading capabilities. However, many importers are smaller companies with less sophisticated capabilities in this space. Marketing and trading can have different objectives, ranging from correcting supply and demand imbalances to mitigating risks, to maximizing margins through make vs. buy decisions. Regardless of the strategy, the LNG business will require robust marketing and trading capabilities to secure supply, fully leverage existing assets and maximize margins.

To be successful, importers need to nurture and develop this capability. Typically, companies with assets and customers that are geographically concentrated are the best candidates for building in-house capabilities since this approach capitalizes on proprietary market information. On the other hand, companies with scattered or few assets tend to outsource to third parties with established expertise.

Today, the LNG industry is in an exciting phase, with significant uncertainties and potential. To realize the potential, companies must focus not only on managing their capital and operating costs, but also on developing a commercial mindset that goes beyond building facilities and securing supplies via long term contracts. This will position companies to reap benefits from market volatility.