How Your Business Can Start Thinking About a Net-Zero Power World
California’s net-zero energy policy – which aims to balance all carbon emissions within the state by 2045 – has produced mixed reactions from business leaders. Some applaud the attempt to move toward climate-friendly equipment policies. Others might worry what the changes will mean for their capital costs, not to mention the logistics of transportation and day-to-day operations. Many are undoubtedly taking a “wait-and-see” approach.
Regardless of opinion, however, one thing is clear: some version of this rule (and others like it) are going to arrive in the near future. The question for those in industry, then, isn’t whether to accept the change but how fast to adapt.
That’s certainly the approach we are taking at Valley Power. Although we have traditionally supplied and serviced diesel engines and generators, our real mission is to ensure that our customers get the equipment they need. If the game is changing, then we will keep adapting to stay ahead of the curve.
How can you do the same with your business or division? In today’s post, we want to look at some things you can do to prepare for a new business environment based on a net-zero emissions policy. Let’s begin with the obvious.
Start Thinking Ahead to New Power Solutions Today
Complying with new laws and regulations might mean moving away from things like diesel- and gas-powered engines or generators. But while the rules might change, the underlying fundamentals of business won’t. In other words, you aren’t going to be operating in a world that is free of extensive energy and transport needs. If anything, your business is going to need more power to continue operations and stay competitive.
In other words, you’ll have to find new solutions one way or another. The problem isn’t going to go away. Knowing that, it’s much smarter, more effective, and less stressful to plan on a longer time horizon. By thinking about the shifts you’ll need to make now, while many of your colleagues are still holding on to existing business models, you can stay one step ahead.
Note that this does not mean you have to find permanent answers right away. Not only would that be unlikely, but the ideas you come up with in the present moment might not be relevant in a few years’ time. After all, technology is always changing and 2045 isn’t close enough for us to accurately forecast all the twists and turns that are yet to come.
Knowing that, your best move might be to think in strategic rather than tactical terms. Set small goals for the next few years, start getting capital together, and try new ideas and technologies. Prepare for the future without committing too heavily to any specific product or initiative. Unless you need to make big capital upgrades, think in terms of budgets and replacement plans that extend out through a decade or two.
There are a lot of companies that are going to underreact or overreact to the California net-zero policy. You don’t have to make either mistake.
Think Carefully About Your Power and Transport Needs
As we have already noted, our business isn’t really about equipment like engines and generators. While we certainly work with those, along with electric motors and variable frequency drives, where we provide the most value isn’t in selling or servicing hardware. It’s in the advice, perspective, and expertise we provide.
To put this differently, you don’t necessarily need a different engine or product. Instead, what you need is power and transportation. How much of it do you require? Where does it need to be, and on what kind of cost basis can it be supplied or replaced?
Once you break down the various elements of your operation into these types of pieces, then the underlying problems become easier to solve. At that point you aren’t thinking about marine engines or transmissions (as examples), but instead about horsepower, watts, and distances. Then you realize that many of your objectives can be met in a number of different ways.
When we begin working with a new customer one of the first things we do is figure out what they really need from us. Then we can see which are the most reliable and cost-effective products that will fit the bill. There isn’t any reason you can’t do the same by moving your attention toward the future.
Ask yourself what kinds of power needs you have at the moment and how those needs might change in the future. You won’t likely generate concrete answers, but that isn’t the point. What matters is that you start to think about the various components of your plan in terms of the results they provide. Once you’ve taken that step you are well on the way to developing a plan that can grow and adapt over time. It will form the heart of your net-zero power strategy.
Evaluate Existing Equipment
Some of the executives and operations managers we’ve been speaking with have taken it for granted that they will need to begin from scratch with new tools to comply with a zero emissions framework. That might be true in some cases, particularly in industries that are heavily reliant on diesel engines and other fossil fuel-powered pieces.
In other cases, though, there might be adaptations that are available. Or, perhaps carbon emissions might be able to be reduced or offset in ways that don’t call for a direct one-to-one replacement.
It’s fair to assume that many of our West Coast clients are concerned about the investments they’ve made (or are planning to make) in diesel-powered equipment. But again, we shouldn’t necessarily assume that today’s projections and technology will still be valid five or 10 years from now. It’s possible that regulations will be tightened further or that costs will increase. It’s also possible, however, that tax incentives, new technologies, or retrofitting equipment will mitigate some of the shock.
Rather than worrying about what could take place a decade from now, why not evaluate your current inventory or fleet based on what we know about emissions today? This is an area where your Valley Power representative can be an enormous help.
Evaluate Upgrades for a Net-Zero Strategy
This is probably the most obvious and important step in the process. On the one hand, the deadline to meet net-zero guidelines is still decades away. On the other hand, time moves quickly and (as we mentioned) it’s much better to be ahead of the curve than behind.
Knowing that, savvy business owners and executives are going to be looking for ways to phase in new technologies as they make upgrades and replacements. That way they can take advantage of tax breaks and PR opportunities while also testing new ideas and technologies. This isn’t just a better approach from a cost perspective, but also in terms of operational goals. It’s much safer and smarter to try something on a small scale today than it is to turn your entire business upside down while hoping for the best tomorrow.
If you want to start thinking about ways you might be able to reduce emissions or try new technologies, then this is the perfect time to speak with your Valley Power representative. Although we continue to sell and service diesel engines and other related equipment, we are also helping our customers take a proactive approach. We know that new regulations are arriving in California and other states. We also know that entrepreneurs and executives want to be protected from unwanted shocks to their businesses.
That means we can help you and your team evaluate current, future, and potential upgrades or equipment or pieces with an eye toward meeting new regulations gradually. We can help you move at your own pace, and budget, while maintaining the same kind of day-to-day schedules and outputs as you have in the past.
Transition to Net Zero in Stages
As you’ve probably realized by now, we expect that most of our customers, both in California and beyond, will transition to new fuel and power sources gradually. Even climate activists understand that change won’t arrive overnight. It isn’t possible to rearrange entire organizations and power grids in the blink of an eye.
Some of your company’s evolution might be organic. Other steps will likely have to be planned well in advance. However, none of the shifts that need to take place are going to be impossible. If anything, they are going to become easier with time as we better understand the laws that are enacted and the technologies needed to work within them.
In the same way, bigger capital expenditures are easier to plan in advance. You may also want to think about making certain changes at points where they are less likely to impact your day-to-day operations (i.e., in a slow season or after a planned activity or benchmark). It might not be possible for you to think of exact dates or time frames now, but engaging in this sort of forecasting can be beneficial.
You could think about the transition to a net-zero framework in the same way you would a succession plan. You might not know exactly when business or leadership will change hands, or what the details will look like when the time comes. The process is easier to manage, however, if you have already laid out the broad strokes well in advance. That way you can keep sight of big priorities and likely obstacles that are lurking on the horizon.
For most, the move to net-zero power won’t be an all-at-once shift from diesel engines to electric motors. Instead, it will be a gradual phasing out of old technology that happens on a planned curve. The time to start thinking about that plan and its most important elements is today.
Talk to the Net-Zero Power Experts
To this point we have referred to California’s net-zero power transition (along with other similar statutes that are sure to arrive in neighboring states) as something you would think about on your own. That’s partly for the sake of simplicity, and also because it’s always up to a business owner or executive to make the tough choices that are in front of them.
In reality, though, you shouldn’t be worried about the details of net-zero compliance. To return to the succession planning example, a smart leader would also draw on expertise from lawyers, CPAs, and others who deal with such transitions more frequently. The same is true of new power requirements. Very few men and women would be able to untangle the requirements on their own, much less find the right products and strategies to carry them forward. That’s what industry experts are for.
We are fortunate to employ some of the very best in our firm. It doesn’t matter whether you need to find immediate solutions for transportation and electricity generation today or think about viable strategies to prepare you for another era – the team at Valley Power is here to help.
Our mission is to help you solve problems. The products we offer are secondary to that goal. So, if you want to start thinking in terms of basic budgets, framework, and ideas then we encourage you to draw on our experience and insight. Don’t worry about not having the figures or details you need. Let us show you the ideas and options that are relevant today and get you thinking about possibilities for tomorrow.
Net-zero power rules are coming to California, but we will be ready long before the deadlines arrive. Let us help you turn this once-in-a-lifetime evolution into an opportunity to build a stronger business. Contact us today.