I scanned the curriculum of prominent business schools to see how many address topics in renewable energy and the subject is absent in nearly all of them. This holds back the advancement of the industry, and deprives MBA candidates of access to information about what may turn out be both the most pressing issue of our age and the greatest business opportunity of the century.
On the one hand, we have public policy that focuses on renewable energy. In Cancun at the climate change conference, no major leader questioned the role of emissions of carbon dioxide from the burning of fossil fuels as the main contributor to global warming. Thus policy support for the spread of green, renewable energy worldwide is strong.
On the other hand, we have technical, implementation-oriented training for “trades” relating to solar installations and energy audits, involving professional credentials such as NABCEP, CEM or LEED AP. This is fine but not enough. In between exists an education chasm the renewable energy business community has not recognized, and therefore growth eludes the industry.
Yes, we know technical breakthroughs in superior conversion of solar to electricity, or storage, or equivalent, would also help push the industry forward. In the United States, Secretary Chu, Department of Energy, has put in place admirable R&D projects to address this. What is missing at the policy level, and in educational institutions, is what I call a “translation curriculum” that bridges the policy-commercial projects divide, and empowers MBAs to think of renewable energy in pragmatic ways.
We need an army of MBAs trained in the language of renewables, who can apply the tools of finance, marketing, and feasibility assessment to energy. How is this done? Public policy and science must converge into projects whose technical and operational metrics are measurable through traditional business means like Net Present Value.
Innovation must be factored in as uncertainty as should be the risks associated with timing. Not only timing for individual ventures but also at the macro level dealing with oil and coal reserves, the impact of increasing concentration of CO2 in the air and so forth. Only when customer assumptions favorably match the production and delivery constraints can we expect renewable projects to increase in number, gain in scale, and deliver green energy for a sustainable future.
When energy got tied to American Recovery and Renewal Act of 2009, the focus became job creation through, for instance, “weatherization” projects. It was a national planning moment and certainly worthwhile. But it’s not enough to foster true growth of an industry like renewable energy. Unless businesses pick up the policy initiatives and run with them, national planning is like pushing a string – movement without traction.
Today, the energy fuse is lit, curiosity about the subject is high, but there is no sense of “bang” that a new industry creates. Why is that? My answer is that there are not yet enough people in the population – a critical mass – who know how to make the business decisions about whether and when pursuing solar, wind, hydro, geothermal or biomass projects, or weatherization are good business opportunities that have economically sound benefits.
Renewable energy fundamentals must enter the MBA curriculum in a big way.
Here is what I believe we need to do:
Think beyond Corporate Social Responsibility (CSR) and look at hard-nosed business: MBA students today are lucky to find an elective on renewable energy, although some B-schools have green MBA programs, and many have relationships with other academic departments under the umbrella term “Sustainability.”
This umbrella term, alas, has a vast scope and runs the danger of falling under “Corporate Social Responsibility,” a soft area popularly and unfortunately associated with charity. Even Triple Bottom Line – businesses that consider People, Planet and Profit – while recognized as an element of corporate strategy — has not penetrated deep into operational levels.
Demystify jargon: Among the difficulties surrounding global warming is that the issues are either arcane science, or policy or research projects in university or national energy laboratories. Implementation is generally by socially conscious individuals, many of whom are hobbyists. Distributed generation is in its infancy. The impact of commercial renewable projects is miniscule when compared to fossil fuel consumption. Energy awareness needs to spread, and Therms and Joules must be calculated along with return on investment.
Stop putting the cart before the horse: Certification courses presuppose a market for the skills that are taught to prospective practitioners. In the case of renewable energy, the training for “trades” precedes the existence of a meaningful market. Policy may coax a market along with subsidies and incentives, but it cannot create the market to suit a timetable set up by Kyoto, Copenhagen, Washington, DC, or Cancun. Business innovators with MBAs will do that.
Decide who will run with it: Since the subject is inter-disciplinary, we need to figure out which university department should offer an MBA in Renewable Energy: Atmospheric sciences? Public policy? Engineering? Natural sciences? Private educational organizations focused on certification for LEED AP or Certified Energy Manager? The answer is all of the above.
Under our current situation the experts that typically occupy faculty positions in the fields mentioned above naturally feel uncomfortable expanding their scope to include the larger yet relevant field. Business schools are the natural arena to bring these experts together in one place and give momentum to the field.
It is wrong to assume MBA students are not interested in sustainability and global warming. Rather, they have not been presented with assignments that combine the science, policy, and business issues brought together into classical project analysis. Sustainability projects, including renewable energy projects, deserve to be subjected to rigorous business assessments that require finance, marketing, operations and distribution, the staple of business schools.
Mahesh P. BHAVE is Visiting Professor of Strategy at Indian Institute of Management, Kozhikode. He is a LEED AP. He may be reached at mahesh@iimk.ac.in.