Ken Silverstein | Sep 26, 2010

The economic pall doesn't seem to dissipate. But it will. Experts are saying that once conditions improve, utilities and other related businesses will start expanding operations and hiring more people.

Public policy has set the tone, although the prevailing technologies to achieve such aims are permitting this to happen. As such, the focus is now on clean technologies, especially the need to produce greener fuels and to expand the smart grid while empowering consumers to save energy. The movers and shakers: the entrepreneurs who have developed innovative tools and who have secured financing.

"Once the economy displays a semblance of a sustained recovery, these start-up and infant companies that have been treading water should get funding," says Quentin Burchill, managing director for Energy at Angott Search Group in Rochester, Mich.
"The hiring will then explode as they will need to quickly build out their staff beyond the core infrastructure of the executive management team to enable them to grow."

Indeed, only the "serial" risk-takers have the stomach for a topsy-turvy climate. They not only have the verve to keep going but they also they the experience to build teams and commercialize products, adds Burchill. Unfortunately, a lot of good ideas go nowhere because their "dreamers" lack those skills.

But the entrepreneurs who can introduce their ideas to venture capitalists and obtain the funding that puts their products in the market will turn next to hiring experts, Burchill notes. Those professionals are then able to "bring in that next layer of management" - the ones in the energy sector who are intimately familiar with the markets in which entrepreneurs need to master so as to sell their inventions.

Statistics show that the average age at utilities is now in the 50s. As those workers retire, the concern is that they will take their skill sets with them. Younger people, meanwhile, see utilities as industrial dinosaurs and as less exciting than other technical fields.

According to a study performed by Sierra Energy Group, a division of Energy Central, about 57 percent of all utilities have a strategy in place for managing the impending shortage of qualified workers. People will be needed to fill everything from engineering jobs to those in environmental sciences and in the field servicing customers and stringing wire from pole to pole.

"Truly where I have seen the most eyebrows raised and the most excitement from both investors and entrepreneurs is in energy efficiency and the smart grid," says Burchill. "Smart grid companies are at a stage of make or break. They need to really grow and their overwhelming need is business development or sales.  Secondarily, it is supply chain logistics, which is sourcing and procurement. That is most noticeable in more mature initiatives like solar and wind."

Smart Grid Investments

The $787 billion federal stimulus bill enacted in February 2009 is intended to rejuvenate a sick American economy. While a third of that money has gone toward to enacting tax cuts, much of the rest has been targeted to creating a New Energy Economy that focuses on producing green fuels and technologies.

The reasoning behind the infusion is that the banking system had been knocked flat and has been unable to lend. Venture capitalists, meanwhile, had been largely unwilling to assume risks. And so the primary source of seed money had become the federal treasury -- not just for those businesses that had shovel ready projects but also for those that had demonstrably tested ideas.

As a result, the smart grid has flourished in today's environment. That technology, for example, can make possible greater integration of renewable generation resources and more deployment of plug-in hybrid electric vehicles. A more efficiently run system would make room for alternative energy sources as well as any additional burdens that would be placed on it from newer innovations.

The advanced metering industry that permits those advances grew by 40 percent from 2008 to 2009, says Howard Scott, managing director for New Jersey-based Cognyst Advisors. "That was in large part because of $4.5 billion federal stimulus monies -- an endeavour that Scott says will lead to 40-50 million smart meters getting deployed by year-end 2011. That would be a third of all meters in this country.

Utilities and their customers, of course, are the ultimate beneficiaries of this newfound emphasis to modernize the electricity infrastructure. Many of them are collecting federal funds to build out smart grids with some of the bigger ones taking in vast sums. That, in turn, could spawn more than $10 billion in related spending on computer hardware and software, adds IDC Research.

Utilities, though, will stick with the less risky forays and ones favoured by policymakers. After some power companies were burned in the 1990s from venture investing, the sector has largely retrenched from those practices. Those kinds of opportunities have been therefore left to the entrepreneurs who able to fund and market their ideas.

"Utilities are very actively looking at investing venture capital into new technologies but they find it hard to pull the trigger," says Burchill. "The ones to watch are those with an interest in clean tech and who know how to build teams. Companies with this kind of backbone are the one really left standing."

Entrepreneurs with good ideas and the fortitude to endure tough market conditions are one thing. Those who are able to secure funding are another. Because of pronounced public support, ventures that are focused on green fuels and energy efficient technologies now have the edge.

So what do you think? Please share your thoughts by posting a quick comment below, or by sending me a longer reply to energybizinsider@energycentral.com.

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