Advisory Services

Planning for the future based on proven scenario analysis principles

Plausible future paths

The energy industry has always been subject to a range of risks beyond business control. Risks may be known or unknown, but industry experience reveals several key areas, including changes driven by political leaders, technological advancements, financial market fluctuations, macroeconomic trends, demographic shifts, and actions by regulatory agencies. Understanding the risks and opportunities associated with evolving clean energy trends is crucial for corporate sustainability, new product development, and effective marketing plans.

Shell was an early leader in the development of scenario planning for evaluating plausible futures. My experience was learned when I consulted with Cambridge Energy Research Associates (CERA), which used the Shell process, to develop a 20-year scenario assessment for the electric utility industry. The basis framework for evaluating plausible futures was to create a rational story with the following five elements:

• Predetermined Elements. Some factors are known and unlikely to change in the foreseeable future. Examples include demographics, such as the average age and number of households, as well as the age, type, and number of cars, and the incomes of population segments.

• Driving Forces. These are major societal or macro forces of change. Examples include the rise of AI, the rise of authoritarian governments, the resurgence of nationalism, the increase in trade protectionism and tariffs, or the adoption of a new technology.

• Prime Movers. These are the individuals or organizations that can substantially influence the driving forces, often by altering the “rules of the game.” Examples include the President of the United States, Congress, State Governors, business leaders, regulatory agencies, the U.S. Supreme Court, environmental groups and advocates, and international governmental bodies.

• Major Uncertainties. Key factors that are uncertain about their timing and effect (up or down). Examples include future interest rates, commodity energy prices, the speed of technology adoption (such as advanced electric vehicles, nuclear fusion, or plug-and-play home virtual power plants), the start or cessation of wars, or the pace of climate change.

• Wild Cards. Unpredictable events, such as the invasion of Ukraine by Russia. The purpose of considering wild cards is to brainstorm potential threats or opportunities that seem unlikely, but could have a major impact on the future plans. Using wildcards provides a stress test of the strategic path, checking the plan’s robustness in responding to unexpected events.

Each consideration of the future begins with an evaluation of the five elements, taking into account current and foreseeable trends.

Looking at trends as the starting point of any analysis

As a Substack writer, I stay up-to-date on clean energy business news, government policies, and technology trends.

For my writing, I update a database of news and industry reports on a daily basis. Using this information, I can quickly research trends for corporate clients — presenting analytical results in Executive Briefs and Webinars.

My research sources include Perplexity AI Pro; subscriptions from Bloomberg, The New York Times, The Financial Times, The Economist, The New Yorker, The Atlantic; industry publications like PV Magazine, Electrek, and UtilityDive; industry data sets from EIA, IEA, IRENA, FERC, and EMBER; Substack writer subscriptions; state and federal regulatory filings; law office briefs; LinkedIn contacts; and academic papers.

With over 45 years of experience in the energy industry, combined with my access to news data sources, I evaluate the practical set of possibilities facing a company’s business strategy.

The Customer Deliverable

The primary benefit of a strategic scenario analysis is to facilitate a conversation about the risks and opportunities affecting business decisions and capital investments. The conversation is structured through a logical and internally consistent story that synthesizes the trends and the five scenario elements. While the executive summary report will be the final document of the project, the major benefit is the opportunity to test the assumptions and conclusions in a conversation.