The home heating oil industry has a long and proud history, and Fuel Oil News has been there supporting it since 1935. It is an industry that has faced many challenges during that time. In its 77th year, Fuel Oil News is doing more than just holding
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38 SEPTEMBER 2014 FUEL OIL NEWS | www.fueloilnews.com Bio: Shane Sweet is an energy and management consultant with clients in the heating oil, propane and motor fuel sec- tors and is a partner with the firm of Lake Rudd & Company. He served the industry as president & CEO of the New England Fuel Institute "NEFI" from 2007 to 2011, and as EVP/director and lobbyist for the Vermont Fuel Dealers Association "VFDA" from 1993 to 2007. CoNTACT: He lives in Shaftsbury, Vt., and may be reached at shanemsweet@gmail.com or 802-558-6101 cell/text. Suggestions by readers for future column content, as well as general comments, are welcome. http://www.linkedin.com/ pub/shane-sweet/7/a52/701 Shane Sweet OPERATIONAL INSIGHT D eath Spiral. The term is often used to describe a process set in motion and a subsequent series of events from which recovery is not possible. Consider the "downward, corkscrew- motion of a disabled aircraft which is unrecoverably headed for a crash." We have all seen certain companies, indeed cer- tain industries; carry on for years, if not decades, in a slow motion death spiral. I think of the type- writer business I hear the term, however, names more familiar to readers have recently been associ- ated with "death spiral", including Blackberry, Dell, LivingSocial, J.C. Penney, Sears, Sharp, Office Depot & Office Max, and Best Buy. One of the above, for example, lost almost $200 million in one quarter alone in 2013, had seen sales declines for more than six years — and eventually announced it would start selling off locations to raise cash. Another, after missing earnings by $1 billion, writing off its then-latest device as a flop, and announcing it would lay off 4,500 employees, sold for $4.7 billion. In 2008, it was worth more than $80 billion. The point is: 1 - we are not alone and 2 – big does not mean immune to mistakes. A business is declining, there is no (good) end in sight, and often follows panicked deal making, selling assets to raise cash, laying off employees to manage cash, manag- ing cash using accounts payables, and host of other tactics too long and painful to cover here. Under the heading of too little – too late, available options include: bankruptcy, simply closing the doors and walking away, fire sale, or "merger" with a healthier partner. So, how to avoid the Death Spiral? I have been advocating for years that we embrace new revenue sources and our continually reinventing ourselves, so today I am adding Microgrids to the list. What is a "micro-grid" and why should you care? Microgrid market revenue is projected to jump from $8.3 billion in 2013 to more than $40 billion annually by 2020, and existing microgrids are not the exclusive domain of the utilities. News website Utility Dive recently surveyed 250 executives of utility companies to gauge their think- ing on the decades-old microgrid concept. 97 percent of the respondents said that they could envi- sion microgrids eventually being a "viable business opportunity" for them. (This gets my attention) Typically, one or more conventional generation assets comprise the core of the microgrid, such as diesel or propane generators, as well as the com- pliment of renewable or nonrenewable sources, including solar photovoltiac or fuel cell systems. Thus, you could be providing fuel to these systems. Imagine further: You own or have an interest in a group of small, independent, power-generating equipment connected to computer systems, that monitor, control and balance energy demand, sup- ply and storage, and all in response to changing energy needs. They produce electricity locally, have finite physical boundaries and provide a single point of connection to the larger utility grid. There are various flavors of microgrids, depending on how, if or when your microgrid is connected to the larger utility grid. Think housing developments, hospitals, college or corporate campuses, government instal- lations, and so on. Revenue, in part, comes from actually selling firm or on-demand power, and-or, as the fuel supplier to the microgrid. One benefit touted for microgrids is with more severe weather in the changing-climate forecast, power systems that can be isolated from the larger grid offer "shelter from the storm", both literally and figuratively. Notwithstanding the variations, state-by- state, including possible franchise restrictions, the Microgrid represents a future revenue opportunity for readers by producing secure, reliable and afford- able energy for entire communities and commercial, industrial and government facilities. l F O N Avoiding the Spiral