With costs for renewable energy so low, it’s no surprise that so many companies are embracing it so actively.
Solar installations reached a new record for installation levels last year, according to the recent US Solar Market Insight report. Wind is also fast becoming part of the procurement strategy for many organizations. For the first time, utilities were outpaced by corporate off-takers in 2015, according to a report by UBS. In Texas, for example, wind is continuing to grow rapidly. Depending on the time of year, wind contributes 20%-45% of the overall energy on the grid, according to a report from the Electric Reliability Council of Texas.
The list of companies achieving 100% green power in their operations seems to grow by the day, and includes many high-profile companies, like Apple and Intel. Despite today’s record low natural gas prices, it’s clear that the adoption of renewable energy is moving past the early adopter stage and into the mainstream.
If your organization is among the many taking their first steps toward renewable energy, know that procuring renewable energy is not trivial. Here are a few basics you should know about buying green energy, and how to avoid the pitfalls that could threaten your renewable energy procurement process.
1. Beware Unexpected Costs
In many cases, procuring renewable energy can involve signing contracts for 15- to 25-year commitments. When done right, renewables offset fuel price risk, but some contracts contain hidden fees or escalators that many organizations can overlook amid the excitement of moving ahead with the initiative. Hidden stipulations can drive up costs over the term of the contract, turning what was intended to be a money-saving venture into a long-term liability.
2. Set Your Green Energy Goals
Do you know the difference between the various purchasing options available to your organization? Are you looking for cost savings, energy savings, budget certainty, or sustainability?
Before moving ahead with a green energy project, consider your true goals and build a renewable strategy to meet your objectives. If your organization doesn’t already have these goals in place, consider setting them based on analysis of your current spending and usage patterns, budget goals, and risk tolerance. This will dictate many of the factors that go into planning and executing your renewable energy transformation.
3. Evaluate All Available Opportunities for Each of Your Locations
Explore the different options available for your region. Each region has its own particular incentives and financial opportunities. Solar, wind, storage, or other distributed energy resources (DER) may make sense for your organization depending on regional incentives, available technology, and the local environment.
Some states, like Colorado or Pennsylvania, offer substantial financial incentives for solar power, and 41 states (plus the District of Columbia) have adopted net-metering policies to compensate for excess solar production. In addition, the availability and quality of each resource (solar insolation, wind speed, geothermal availability, biomass feedstocks) vary based on your site location.
Finally, the pricing structure for conventional grid electricity, which forms the basis for any evaluation of potential alternatives, can vary significantly, with over 19,000 different tariffs across the US. It’s important to take stock of each factor to ensure you don’t miss out on the best opportunities to invest in renewables.
4. Set Yourself Up for Success with the Right Tools
Once you decide to move forward with a project, make sure you have the tools to track your decisions. Many organizations often end up with multiple behind-the-meter assets or market positions, and then can no longer reconcile what they are spending on energy or what they are saving from their renewable energy project.
Want to get the most value out of your renewable energy investments? Contact our experts today.