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Finding the energy – Cambridge MBAs find opportunity in low carbon

2 May 2017

The article at a glance

Fossil fuels may still dominate the energy landscape but all the evidence is that their dirty, malodorous days are numbered. With around …

Fossil fuels may still dominate the energy landscape but all the evidence is that their dirty, malodorous days are numbered.

A View of Wind Turbines and Solar Panels
With around half of global R&D in the sector now devoted to developing low carbon alternatives like solar and wind energy, and big polluters like China pledging to become low carbon leaders, a major global transition is underway.
But what kinds of business opportunities is this changing landscape offering up and what are the expert predictions for future trends in the sector? Professor Michael Pollitt, lecturer and coach of the Cambridge MBA’s Energy and Environment Concentration, comments:

“The first thing I teach my students is that energy predictions are best avoided! It’s a difficult sector in which to predict anything. What we try to do on the MBA Concentration is to stay closely connected to experts in the industry who are very well-informed about what is happening. We also approach the sector from economic principles – how markets work and how economics is driving future trends – rather than trying to predict what those trends will be. So we look at things like what governments are doing to deliver on their low carbon targets and what business is doing with R&D.”

Here the signs are good for business opportunities in the low carbon future. The R&D and new investment space, especially in the electricity sector, is shifting radically to low carbon and this trend is only set to grow, creating opportunities around wind and solar energy, demand reduction, and electrical energy storage. EU targets alone for 2030 promise electricity systems dominated by renewables and nuclear. Countries like Japan and the US are at the forefront of developing new products and ideas which will naturally cascade to developing countries. China is committed to a low carbon future and, across the world, local air pollution issues in major cities (such as London) are likely to support a transition to electric vehicles.

With developing countries set to avoid reaching fossil fuel maturity and leapfrog to low carbon, one Cambridge MBA alumnus and his colleagues are poised to get involved in this space with start-up Cambridge Energy Partners, which offers the world’s first fully movable solar product that tracks the sun. This flexible, re-deployable system is made in a factory and shipped to site, where it is easy to install and cost effective to move with changing requirements. The product’s modularity means it can be used effectively in smaller entities like hospitals and schools as well as large scale industries, even cities. The partners are putting the finishing touches to their prototype and moving into the proof of concept stage in May.

Thomas Miller (MBA 2013)
Thomas Miller (MBA 2013)

Cambridge Energy Partners’ CEO, Tom Miller, (MBA 2013) is looking forward to disrupting the market:

“The global market, long dominated by energy giants, is moving towards decentralisation, with cost effective, flexible products such as ours targeting under-served markets in developing countries, and innovating new technology to serve those markets. But our long term goal is to enter big markets and disrupt them. We are already talking to the more innovative corporates who are more ready to make the leap to trying new products like ours.”

For the moment, they particularly have their sights set on mining companies operating in developing countries on the ‘sun-belt’ – Africa, South East Asia and Latin America – where mining has a big need for flexible, affordable power. Tom adds:

“The energy sector is at an interesting point and disruptive companies like ours are bringing flexibility into the market. Globally, 80 gigawatts of solar energy was installed last year (2016) but in five years this is likely to be in the region of 500 gigawatts – a market worth $500 billion. And this market is only set to grow as continents like Africa climb up the development curve and have a greater demand for energy at the same time as climate change is demanding we find more sustainable solutions.”

Another Cambridge MBA alumnus Gunnar Herzig (MBA 2015) has also found an interesting opportunity emerging from the changing energy space. Gunnar is currently setting up CLIFI – a climate finance advisory start-up offering a niche service to institutional investors, such as pension funds and investment firms looking to invest in offshore wind. CLIFI will launch later this year. Gunnar explains:

“This is a boutique advisory firm focused on advice in investing in global offshore wind projects. CLIFI will advise on topics such as risks, returns, the regulatory regimes operated by different countries, and inform clients about the investment opportunities opening up through many different offshore wind projects starting up around the world.”

Profile photograph of Gunnar Herzig
Gunnar Herzig (MBA 2015)

Gunnar worked for a large German energy company for seven years specialising in offshore wind before taking his MBA. He came to Cambridge with an idea for a start-up but found the Cambridge MBA invaluable in honing and developing his plans – especially the Energy and Environment Concentration, which broadened his knowledge across the renewables industry. The Global Consulting Project then gave him the chance to delve deeper by taking part in a project (with four other MBAs) with a Swiss investment firm looking to move into investing in offshore wind. A summer internship followed with the same Swiss company and then Gunnar returned to Germany to work for his former company while setting up CLIFI.

He is excited about the possibilities coming out of the fast-growing global interest and investment in offshore wind:

“Two trends are driving this – existing technology, tried and tested in Europe and North America, is now being exploited by new markets such as China, India, Brazil – countries with large coastlines and big populations living near them which require large amounts of energy. The second trend is new technology being developed in existing markets. Following the spectacular outcome of the latest German offshore wind auction, resulting in subsidy-free renewable electricity, expect some more great developments in offshore wind energy over the next few years and at a global scale. It’s an exciting time.”

For MBAs keen to explore the energy sector for future business opportunities, the Energy and Environment Concentration offers a plethora of opportunities to discuss ideas with experts in the field. Coach Nights are a chance to meet University of Cambridge experts with backgrounds in areas like the global wind industry and electric vehicles. The Board Impact Project, the finale to the Concentration, gives teams of MBAs the chance to design a low carbon product or business opportunity and pitch it to a panel of senior figures from companies like EDF, Shell, Centrica and Bloomberg Energy Finance. Professor Pollitt says:

“These are people with deep knowledge in the energy sector so this is a great platform for MBAs with an idea to try it out with real-world experts.”

With climate change and the low carbon future here to stay, this is one sector where the opportunities look set to keep on coming.