IT technology development is an example of an area where products become obsolete at a high pace as a result of newer, more functional and possibly cheaper technologies being introduced. The result is that technology development cycles are short and high risk and a technology developer, out of necessity, has to manage risk exceedingly well to survive.
Energy projects generally take time to develop, validate and commercialize. On the other hand, the rate of introduction of new innovations in the energy sector is increasing pace. At some point in time, new innovations are going to make some energy projects which were developed at a huge expense obsolete before the invested capital has been recovered in full.
How does one minimize these losses in an industry where development projects are generally long term in nature?
Due to the critical nature of energy sector, there is a huge space for the introduction of disruptive innovations, is there any reliable way of predicting the likelihood of any such disruptions?
Are there any established methods technology developers and big energy players are using to manage the risks of such losses?
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