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Smart Approach to Renewable Energy

Today’s businesses and industries must focus on optimizing many operational issues to benefit their shareholders, customers, employees and local community. Energy is one business component that is attracting significant attention, with sights often set on renewable sources. However, incorporating renewable energy into a company’s power mix can be challenging and produce less-than-worthwhile results.

To be successful, organizations must set realistic and beneficial green goals by understanding their drivers and specific business needs, researching available sources, and recognizing the nuances associated with renewable resources. A holistic evaluation of an energy environment will help achieve the best energy strategy.

What is Driving You?
So you want to go green. Do you know why? It is important to identify the factors influencing your motivation for energy efficiency.

  1. Reduce operating costs. Everyone wants a more profitable bottom line. Reducing energy costs through alternative sources may promise lower product prices and increased shareholder value. However, purchasing or installing renewable energy sources can be expensive, depending on geography and infrastructure, and not produce the intended financial benefits.
  2. Commit to sustainability. Renewable energy can affect the triple bottom line: economic (reducing energy costs), social (taking capacity off the grid) and environmental stewardship (producing goods and services with less total emissions). Be cautious; benefits could be offset by clearing woodlands for solar arrays or lack of consistent winds. More companies are using life-cycle analysis to determine the true cost and impact of their energy choices.
  3. Enter a new market. Organizations looking to operate in new markets may discover a heightened environmental awareness or other requirements to do business in those areas. For example, International Organization for Standardization (ISO) certification requirements vary by country (i.e., ISO 9001 certification is required to do business with certain entities in Ireland); however, it is not necessarily driven by regulations, but by market conditions and customer requirements.
  4. Mitigate market volatility. Reducing sole reliance on grid-derived energy not only reduces grid dependence, but may also avoid or lessen price fluctuations in the energy market due to onsite power generation.
  5. Comply with regulations. Everyone must comply with national and local permits and regulations that protect our air, water and soil. Using less energy from traditional sources can reduce greenhouse gas emissions and your carbon footprint.

A Self-Study in Energy Use
An energy audit is a tool to identify and quantify cost-effective energy strategies, including the use of renewable energy. An initial audit includes a preliminary analysis and facility walkthrough to identify where and how energy is being used—a necessary step in determining renewable energy system applicability. A skilled audit team will review findings and conduct further analysis on the most promising renewable energy options.

For a specific energy project, a targeted audit can address just a single project. The report can be a simple energy savings estimate, or a full financial analysis that considers ownership and tax implications, depreciation and other project specific details. This can be combined with a schematic design or performance specification to provide all of the detail required to get approval for a large capital expenditure.

Do I Buy or Install?
The decision to buy renewable energy from your utility or install infrastructure onsite is an important one. Questions to consider when thinking about buying or installing:

  • Do I have the space or infrastructure? Solar can take up a lot of real estate, either on the ground or a roof, and structures must be able to support the weight. Owning and operating your own facility can help you meet any energy dependence goals.
  • Do I own or rent? Some businesses can use renewable energy improvements as part of lease negotiations when renewing, expanding or moving. Green properties are hot with long-term value.
  • Who is the best supplier of renewable energy, if a supplier even exists? You may even be able to specify the type of energy to purchase (e.g., wind or solar). Power-purchase agreements allow a utility to install, own and operate a power facility on private property with the business entering into an agreement for some of that power.
  • What is my return on investment? What are we looking to get out of this system: goodwill or cost savings? Paybacks are different around the world. Solar may be great in the northeastern United States where the cost of electricity is higher, but may not be the best option in areas where costs are cheaper. States also incentivize differently, providing different levels of costs and returns on investment.

Green to Gold
Over the past 10 years, corporate energy efficiency has become less driven by governmental regulations and more motivated by competitiveness and brand image. Being smart about energy efficiency programs is good business, and while cost reduction is a major competitive driver, meeting the growing expectations of customers, employees and shareholders is also a key to developing sustainable energy programs. Many companies are looking not only at themselves, but also down the supply chain and pushing their key vendors to be energy efficient and sustainable as well.

Another key driver is the risk of diminishing resources that many industrial companies face. Recent surveys indicate that many companies anticipate their core business objectives will be affected by natural resource shortages in the next 3 to 5 years. Perhaps the best indicator that energy efficiency has become a core business practice is that many businesses now require the same return on investment for sustainable energy projects as for any other business project they consider.

Leveraging renewable energy has many benefits, but the decision to integrate renewable resources must be based on sound and comprehensive research and operational analyses. By evaluating all of the relevant drivers, needs and desired outcomes, an organization can make renewable energy choices with confidence.

Be Informed