Picture this. You are walking along the winding roads of your industry career. Suddenly, above the howling winds and rain you hear the distant clatter of hooves. You stop and listen.
The sound grows louder and urgent. You step to one side. A magnificent stallion gallops by, kicking up clouds of mud and gravel. The rider sits low in the saddle. His eyes fixated on arriving at someone else’s project. Excitedly you turn to your colleagues. “There it is,” you exclaim. “I’ve seen that one before!”
Often you don’t hear it coming. Instead, there’s just a sensation of warm horsey breath on the back your neck. If so, then congratulations! You may have encountered one of the four horsemen of the regulatory apocalypse. Our horsemen are not the war, famine, pestilence and death of Vicente Blasco’s novel. Rather these are the regulatory trade-offs which appear around our industry’s complex issues. In truth, there are many horsemen – but reach into your pockets for the sugar cubes as we visit four of my favourites.
Compliance value versus cost
What kind of regulatory relationship is right for you?
Do you accept that sometimes your business will be non-compliant with a regulatory obligation? If so, perhaps your strategy is to ‘bank’ the value of ‘sailing close to the wind’ and accept the costs and risk of occasional non-compliance. Seeking forgiveness for any transgression, you may choose to pay the fine but avoid the costs of strong process controls and oversight. You could even build a complex spreadsheet and calculate the break-even point. Alternatively, you can set a strategy of total compliance, accept the costs and then bask in the glory of total compliance.
At the point of signing off the risk register, do you feel a gentle nuzzling against your shoulder? A smell of warm sweat mixed with hay? You pause for a moment. Perhaps there is a case for more assurance and due diligence…after all, horses can bite!
Innovation versus regulation
Galloping into town, throwing clouds of desert sand into the air, a dozen yelling horsemen scatter the good citizens of Innovation in their wake.
In forums that discuss energy demand-flexibility regulation, we frequently hear about the ‘Wild West’. Multiple standards, different markets and varying requirements. The chaos is necessary to allow a winner to emerge. But how do you develop any product or service if there is no requirement? And how do you encourage investment if there are no standards?
The ‘sandbox’ may be part of the answer. In this walled garden we observe proceedings safely from afar. Leaning against the gate, ruminating lazily on a blade of grass, we wince as riders fall from their mounts and shake our heads as the horse bolts to freedom.
Investor compliance managers would probably prefer a dressage event. Clipboards in hand they gaze admiringly at the choreographed displays of horsemanship. Sucking through their teeth at every misstep, they look forward to a perfect score on the path to full return on investment.
Network investment versus flexibility, performance and cost
We wander past a well-tended racecourse and into the adjacent stables. There we see stall after stall of horsemen tending their mounts. In the networks section, we admire ‘asset Investment versus demand flexibility’. It looks old and distinguished. Its rider assures us of a recent new lease of life. ‘Network performance versus cost’ is housed alongside and takes a healthy interest in her neighbour.
The horseman of the apocalypse
Dimly lit by a single narrow window, the magnificent stallion at the end of the building dwarfs the others. Rippling muscles, eyes as red as coals, it paws the ground, snorting in anticipation of the race ahead. We notice that the lock on the stable door has been shaken loose and is hanging by a single rusty screw. The name above the door reads ‘climate change versus carbon reduction’.
The rider is enveloped in shadow. Making nervous conversation, we shout questions into the darkness. “Are you looking forward to the race? Will you win?” The rider leans forward, his face emerging from the shadows. His eyes are hollow. His cheeks gaunt and angular. But he has a wide toothy smile. “It’s a racing certainty,” he replies with a chuckle.
How we can help
If you are interested in talking to Gemserv about how we can help you with your regulatory trade-offs, please do get in touch with us at bd@gemserv.com.
