Strategy
Build a Board That Improves Decisions
The quality of governance becomes visible in the choices a company makes, the assumptions it challenges and the speed with which it responds to contrary evidence.
INDUSTRIAL COMPETITIVENESS
Power Is Becoming a Location Decision
Energy competitiveness belongs in capacity planning, operating design and the board’s capital conversation.
The cheapest land can be an expensive site
Consider a proposed facility whose business case is built around an attractive parcel, a skilled workforce and proximity to customers. If the project has not established when adequate power will be available, it has not established when the facility can earn revenue. This hypothetical illustrates why energy belongs at the beginning of a location decision. Its importance extends beyond the price printed on a utility bill.
The IEA's July 2026 electricity update forecasts continued growth in power demand and describes differing regional responses to energy price shocks. The executive implication is that a global energy narrative cannot substitute for site level diligence. A company needs to understand availability, reliability, price exposure and the practical options for changing how it consumes power.
Understand the load before negotiating the supply
Begin with the operating process. Identify which activities require continuous supply, which can be shifted and which can tolerate an interruption. Examine how demand changes across a shift, a season and the production cycle. A simple annual consumption estimate may conceal a short peak that drives costs or a sensitive process that creates expensive losses when supply quality deteriorates. Engineering and finance need the same operating picture.
Use that picture to compare alternatives. A contract that looks attractive against average demand may leave expensive exposure during the hours that matter most. A proposal for on site generation or storage should be tested against the actual load and operating constraints. Our recommendation is to make the service requirement explicit before choosing a technology. Start with what the business needs to produce safely and reliably, then assess the available ways to provide it.
Value flexibility through the whole operation
The IEA's Electricity 2026 report places particular attention on grids and system flexibility, including demand response and storage. For an industrial operator, flexibility can mean adjusting consumption without compromising the customer promise. Its value depends on the process, the local market and the terms under which the company buys electricity. It should be demonstrated through a business case.
Changing a production schedule may affect overtime, maintenance, inventory and delivery commitments. A narrow energy saving can therefore create a larger expense elsewhere. Bring the operating team into the analysis before accepting a modeled benefit. Where a limited trial is possible, measure the full result. The useful question is how much operating freedom the business can obtain at an acceptable total cost, with safety and product quality preserved.
Examine the infrastructure behind the offer
The IEA's World Energy Investment 2026, published in May, tracks capital flows across energy projects and examines the effect of energy security concerns on investment priorities. For a company choosing a location, national investment ambition is relevant context. It does not establish the readiness of the connection, equipment and services a particular project requires.
Request evidence of the milestones on which the facility depends. Understand who controls each milestone, which approvals remain and how delay would affect the commercial launch. Examine the assumptions behind expansion capacity as carefully as the initial connection. Avoid treating an encouraging conversation as equivalent to a confirmed delivery arrangement. The purpose is to identify dependencies while the project design can still change without stranding substantial capital.
Put energy choices through capital discipline
Efficiency improvements, equipment renewal and alternative supply arrangements compete with other uses of cash. Assess their expected operating benefit, implementation risk and maintenance requirements on a consistent basis. Separate a lower average energy cost from protection against severe price exposure or disruption. Both may matter, but they create value in different ways. The investment committee should understand which benefit supports the proposal and what evidence underpins it.
Include the cost of changing course. A long commitment may create predictable terms while reducing future flexibility; a shorter commitment may preserve choice while exposing the business to market conditions. Evaluate those tradeoffs with qualified commercial and technical specialists. Management should avoid presenting a single price forecast as certainty. Test the proposal against plausible operating and demand conditions, then explain why the investment remains appropriate for the company's actual strategy.
Make performance visible after approval
Once an energy project is approved, its owner should track delivered results against the original case. Reconcile consumption with output, operating hours and product mix so that a reduction caused by weak demand is not mistaken for improved efficiency. Record downtime, maintenance expense and implementation problems. This gives the organization a better basis for deciding whether an approach should be extended to another facility.
Energy competitiveness is ultimately a question of productive capability. Can the company deliver what customers need at a cost and level of reliability that support its strategy? Leaders who bring that question into location and capital decisions early will make more informed commitments. The most persuasive proposal will connect a credible supply arrangement to a well understood operating process, with enough room to adapt as market conditions and the business itself change.
Evidence & further reading
Go to the source.
- Electricity Mid-Year Update 2026International Energy Agency · 2026-07-23
- Electricity 2026International Energy Agency · 2026-02-06
- World Energy Investment 2026International Energy Agency · 2026-05-28
Executive analysis informed by the linked sources. Hypothetical examples are identified in the text. Published 3 October 2026.
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