Software and services: the one-two punch for the energy industry
As the third largest industry within the United States, the energy sector can be tough to navigate. With an ever-growing consumer demand, advancements in technology and a rise in the amount of data acquired, supply companies can be left feeling daunted by even the simplest of tasks. With over 50 years of combined experience in the energy field, ESCO Advisors has the answers to many of the questions senior executives ask themselves when running operations and risk.
Founded in 2011 by a group of industry professionals, ESCO Advisors has since become the leader in retail energy supply managed software solutions and consulting services.
The company’s philosophy is simple, yet effective: grow energy supply companies by reducing overhead and increasing efficiency, margins and profitability by leveraging expertise.
“Off-the-shelf solutions like ours are far more advanced than companies who have tried to build their own,” said Jon Parrella, chairman and founder of ESCO Advisors, during a recent interview.
With a driving vision and entrepreneurial spirit, Jon Parrella and his brother Michael Parrella—CEO of ESCO Advisors—are growing the energy supply industry one company at a time.
From consultations to integration
Prior to founding ESCO Advisors, Jon Parrella founded and operated a retail supply company. At the time, the market had much less competition, and as a smaller company Jon Parrella was able to compete with the larger companies.
As the field began to fill with competitors, the company was sold and Jon Parrella began to do consulting work at the request of industry executives.
“I started working with one of the larger suppliers at the time alongside my previous VP of Sales (now VP of Sales at ESCO Advisors), just working on IT and sales consulting,” said Jon Parrella. “We then looked at each other and said, ‘Why consult with just one company when we can consult with many?’”
And, so, ESCO Advisors was born, with the company broadening its consulting services to sales and marketing departments, brokerage network development, IT architecture and risk management.
“We started to take on more and more suppliers and we had to bring in additional expertise,” continued Jon Parrella.
Two years later, the company launched its first product and discovered a niche within the marketplace that wasn’t fulfilled by others. In 2014, at the request of Jon Parrella, Michael Parrella joined ESCO Advisors to optimize the company’s operations and run the company from its headquarters in Danbury, Connecticut.
“We were able to complement each others’ skills,” shared Michael Parrella.
By responding to the challenges that every energy supply company was facing, clients began to roll in for ESCO Advisors.
“Having been in the client’s shoes with my previous company, I was given the ability to see where there were voids in the marketplace and where there was opportunity,” said Jon Parrella.
The company now has two main products, one for customer and broker relationship management, and a demand forecasting system for managing risk. In conjunction with a billing system, these two systems provide the ability to automate the operations and risk of a retail supplier, optimize staffing, and ensure access and visibility to data is simple and efficient.
A competitive advantage
Jon Parrella’s previous success with his retail supply company is definitely a factor for the insight ESCO Advisors has for its clients. ESCO Advisors is able to build solutions based off of knowing what works best rather than having to endure a learning curve.
“A lot of the time, we build a product in anticipation for what the client requests,” said Jon Parrella. Knowing what a client needs is a specialty of ESCO Advisors and one the company prides itself on.
The second ingredient for ESCO Advisors’ recipe for success is offering not only state-of-the-art software, but services as well. The majority of the energy industry still relies on Microsoft Excel spreadsheets to collect and interpret data, but as Michael Parrella puts it, “that’s a thing of the past.”
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“Once you get to a certain size of spreadsheet, it’s not going to work,” explained Michael Parrella. “The amount of data you have to work with is too massive and inefficient to make business decisions. We provide an efficient and scalable service.”
After working with more than 40 clients, ESCO Advisors has seen what does and doesn’t work and has best practices that others simply don’t. By remaining focused on the systems and services they provide, along with the highest degree of professionalism, ESCO Advisors has the competitive edge that keeps clients returning for more.
Implementing continuous improvement strategies
“If anything is true, that is,” answered Michael Parrella when asked if continuous improvement strategies were in place at ESCO Advisors. “We are constantly putting pressure on ourselves to improve in every way—from our products to our interactions with clients.”
ESCO Advisors is a strong believer in there always being room for improvement, and the company doesn’t follow a “rinse and repeat” model, but rather a “rinse, review and improve” one. In addition, ESCO Advisors has implemented performance measurements into its software to improve the quality of forecasts and the data transmitted to clients.
“We measure for accuracy every day for our clients, and if something goes wrong, we look into it, fix it and build a solution into our systems,” said Jon Parrella.
Customer feedback is integral to the success of ESCO Advisors and the input received from clients is integrated into product updates and system procedures.
“You really get the best of breed in our software that not a lot of people have access to,” added Jon Parrella.
ESCO Advisors has taken a different approach than most Software as a Service (SaaS) companies when it comes to hosting the application that has helped them grow quickly. ESCO Advisors works with Adapture to run a managed hosted solution that costs a quarter of the price of hosting in the cloud, while still allowing for the ability to architect a solution specifically designed for disk I/O.
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“With the amount of data we need to process every day, it was critical to architect a solution that was scalable and fast,” said Michael Parrella. “We have been able to grow quickly without having to have the IT overhead to manage our servers, and make sure we always have the latest and fastest equipment available.”
Marketing through education
It should come as no surprise that ESCO Advisors offers distinguished software. But while those who are used to traditional models might fear overcoming technological hurdles, ESCO Advisors takes an aggressive approach to client care.
To aid suppliers avoid the pitfalls of the energy industry, the company assigns dedicated analysts and support representatives to each client.
“If a product is too difficult to use and your customer is not trained on it properly, they’re not going to use it,” said Jon Parrella. “If you thoroughly engage them with the product and show them the benefits and efficiencies of using it, you provide a much better working relationship and receive higher customer satisfaction.”
Product education is something that ESCO Advisors takes seriously. As a member of CCRO (The Committee of Chief Risk Officers), Jon Parrella and the organization are assembling a white paper on the best practices of risk management for the retail energy industry that is expected to be released within the next six months.
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Following the release, the CCRO plans to offer continuous education based off of the white paper in a school environment where ESCO Advisors will be a main educator.
“It’s something that we take a lot of pride in after working hard to build the credibility to be able to do that,” shared Jon Parrella.
After extensive growth in such a short period of time, one can only begin to imagine what lies ahead for ESCO Advisors. What we can expect to see during the next 12-18 months is continuous expansion.
With plans to open an office in Houston, Texas and venturing into the natural gas sector and other vertical commodity opportunities where risk is inherent and predictive, ESCO Advisors is prepared for whatever comes its way.
“We are at a huge advantage thanks to the services and expertise we offer,” concluded Jon Parrella. “Most suppliers either haven’t realized it yet or are just beginning to, and we’ll only continue to grow.”
Carbon dioxide removal revenues worth £2bn a year by 2030
Carbon dioxide removal revenues could reach £2bn a year by 2030 in the UK with costs per megatonne totalling up to £400 million, according to the National Infrastructure Commission.
Engineered greenhouse gas removals will become "a major new infrastructure sector" in the coming decades - although costs are uncertain given removal technologies are in their infancy - and revenues could match that of the UK’s water sector by 2050. The Commission’s analysis suggests engineered removals technologies need to have capacity to remove five to ten megatonnes of carbon dioxide no later than 2030, and between 40 and 100 megatonnes by 2050.
The Commission states technologies fit into two categories: extracting carbon dioxide directly out of the air; and bioenergy with carbon capture technology – processing biomass to recapture carbon dioxide absorbed as the fuel grew. In both cases, the captured CO2 is then stored permanently out of the atmosphere, typically under the seabed.
The report sets out how the engineered removal and storage of carbon dioxide offers the most realistic way to mitigate the final slice of emissions expected to remain by the 2040s from sources that don’t currently have a decarbonisation solution, like aviation and agriculture.
It stresses that the potential of these technologies is “not an excuse to delay necessary action elsewhere” and cannot replace efforts to reduce emissions from sectors like road transport or power, where removals would be a more expensive alternative.
The critical role these technologies will play in meeting climate targets means government must rapidly kick start the sector so that it becomes viable by the 2030s, according to the report, which was commissioned by government in November 2020.
Early movement by the UK to develop the expertise and capacity in greenhouse gas removal technologies could create a comparative advantage, with the prospect of other countries needing to procure the knowledge and skills the UK develops.
The Commission recommends that government should support the development of this new sector in the short term with policies that drive delivery of these technologies and create demand through obligations on polluting industries, which will over time enable a competitive market to develop. Robust independent regulation must also be put in place from the start to help build public and investor confidence.
While the burden of these costs could be shared by different parts of industries required to pay for removals or in part shared with government, the report acknowledges that, over the longer term, the aim should be to have polluting sectors pay for removals they need to reach carbon targets.
Polluting industries are likely to pass a proportion of the costs onto consumers. While those with bigger household expenditures will pay more than those on lower incomes, the report underlines that government will need to identify ways of protecting vulnerable consumers and to decide where in relevant industry supply chains the costs should fall.
Chair of the National Infrastructure Commission, Sir John Armitt, said taking steps to clean our air is something we’re going to have to get used to, just as we already manage our wastewater and household refuse.
"While engineered removals will not be everyone’s favourite device in the toolkit, they are there for the hardest jobs. And in the overall project of mitigating our impact on the planet for the sake of generations to come, we need every tool we can find," he said.
“But to get close to having the sector operating where and when we need it to, the government needs to get ahead of the game now. The adaptive approach to market building we recommend will create the best environment for emerging technologies to develop quickly and show their worth, avoiding the need for government to pick winners. We know from the dramatic fall in the cost of renewables that this approach works and we must apply the lessons learned to this novel, but necessary, technology.”
The Intergovernmental Panel on Climate Change and International Energy Agency estimate a global capacity for engineered removals of 2,000 to 16,000 megatonnes of carbon dioxide each year by 2050 will be needed in order to meet global reduction targets.
Yesterday Summit Carbon Solutions received "a strategic investment" from John Deere to advance a major CCUS project (click here). The project will accelerate decarbonisation efforts across the agriculture industry by enabling the production of low carbon ethanol, resulting in the production of more sustainable food, feed, and fuel. Summit Carbon Solutions has partnered with 31 biorefineries across the Midwest United States to capture and permanently sequester their CO2 emissions.
Cory Reed, President, Agriculture & Turf Division of John Deere, said: "Carbon neutral ethanol would have a positive impact on the environment and bolster the long-term sustainability of the agriculture industry. The work Summit Carbon Solutions is doing will be critical in delivering on these goals."
McKinsey highlights a number of CCUS methods which can drive CO2 to net zero:
- Today’s leader: Enhanced oil recovery Among CO2 uses by industry, enhanced oil recovery leads the field. It accounts for around 90 percent of all CO2 usage today
- Cementing in CO2 for the ages New processes could lock up CO2 permanently in concrete, “storing” CO2 in buildings, sidewalks, or anywhere else concrete is used
- Carbon neutral fuel for jets Technically, CO2 could be used to create virtually any type of fuel. Through a chemical reaction, CO2 captured from industry can be combined with hydrogen to create synthetic gasoline, jet fuel, and diesel
- Capturing CO2 from ambient air - anywhere Direct air capture (DAC) could push CO2 emissions into negative territory in a big way
- The biomass-energy cycle: CO2 neutral or even negative Bioenergy with carbon capture and storage relies on nature to remove CO2 from the atmosphere for use elsewhere