Organizations are increasingly choosing renewables over the traditional energy grid as part of their energy management strategy. With tax extensions, advances in technology and robust sustainability goals set by companies, renewable resource adoption has become more cost effective and attainable.
While renewable resources are more accessible than ever before, many organizations still don’t know where to begin. A recent poll of financial executives found 34 percent lacked a starting point to implement energy management practices, and only 12 percent were confident in their companies’ energy cost, consumption and price data collection procedures. Without the foundational benchmarks in place, organizations miss opportunities to integrate renewable energy, increase sustainability and drive down energy costs.
The intersection of energy management and renewable energy can be difficult to navigate, but many companies have successfully invested in renewable resources. Google, for example, recently bought enough wind power to match 100 percent of its 2017 energy usage. While the tech giant sets a high bar, all organizations should establish a strong energy management framework as a foundation to ensure renewable adoption is strategic and impactful. Below are some tips to make the energy management journey easier.
Embrace Data Analytics and Establish Benchmarks
Commercial buildings account for 40 percent of energy consumption in the U.S, and 30 to 50 percent of that energy is routinely wasted. Without the proper data to capture and analyze this usage, companies can be left in the dark about their potential savings. By conducting energy audits and setting benchmarks, businesses can better understand their energy output, eliminate excessive energy use, restructure utility contracts to reduce costs, and establish a clear roadmap to realize energy savings and become more sustainable.
An energy audit, which can look at everything from smart thermostat data to utility bill history, is a common first step on this journey and the most critical. Once a company understands its energy management maturity, it can begin to integrate renewables into its roadmap.
Be Mindful of Geography
Organizations who want to set ambitious goals need to account for the energy markets they operate within and the resources available. A company located in the Southwest will have a more diverse solar market than a company in the Northwest, and a company in Texas would benefit more from local access to wind power, as it produces more wind power than its neighboring three states combined. In Texas, wind power capacity recently surpassed coal, and the University of Texas Austin predicts that wind energy will overtake coal in Texas by 2019.
Due to its available resources and progressive state policies, California offers companies more options for solar investments. Cisco, for example, recently agreed to a 20-year solar power purchase agreement for its San Jose headquarters. This agreement will help Cisco meet its sustainability goals of reducing greenhouse emissions by 40 percent and using renewable energy for at least 25 percent of its power needs every year. When companies invest in energy that’s readily available, it helps them take tangible steps forward on their energy management journey.
Don’t Discount the Importance of Energy Rates in Understanding Your Options
Renewable energy has been disrupting the energy market in recent years, and will continue to do so, as it recently became the cheapest unsubsidized option for adding new wholesale electricity supply. While prices are cheap at the wholesale level, renewable energy often drives significantly complex retail rate structures that will impact the costs and benefits of any on-site systems.
While net metering has been a common solar rate structure for years, utilities have begun to adjust policies, grandfathering customers into extended contracts and creating kilowatt caps. Before deciding on a net metering rate structure, companies looking to incorporate renewables into their energy portfolio should research individual states’ laws, as only 38 states offer it as an option, and all have differing policies in place. Utilities have also adopted green tariffs, which allow companies to purchase up to 100 percent of their electricity from renewable sources through a fixed rate. As of May 2017, 13 utilities across 10 states offered these tariffs as a way to serve corporate America on its quest for sustainability. They’re still in the pilot phase, but green tariffs create an environment that allows corporate-utility partnerships to succeed, while attracting big businesses to the states that have adopted the policies.
Find the Right Partner
It’s important for companies to know all energy resource and distribution options available and trends on the horizon before committing to a contract.
Partnering with key utilities can be helpful in states with diversified energy markets, including Texas and California. A handful of utility companies are more committed to renewables and able to deal with complex contracts efficiently. A 2015 report found that four utilities accounted for more than 50 percent of total clean energy sales, and they all operated in progressive clean energy states. Alternatively, some states and utilities actively discourage renewable energy use. In 2015, Nevada reduced the financial incentives to put solar panels on roofs. Without incentives, it may be difficult to find a trusted utility partner, and state regulations may make it harder to navigate renewable energy policies.
Third-party suppliers have emerged where utilities leave gaps to provide energy products and services. Solar partnerships, such as solar leases and power purchase agreements (PPAs) offer organizations alternative resources for renewable energy resources. The PPA model, which Cisco has utilized, allows the third-party to offset its customers’ utility bills. It then sells the power to customers at a fixed rate, which is lower than the local utility. Many large corporations prefer this model, because it allows them to have bold sustainability and renewable energy goals, without being in the business of owning energy producing assets.
Look Beyond Company Walls
As more companies realize the advantage of incorporating energy data insights into their business strategy, they are better positioned to integrate renewables into their energy and sustainability goals. Leveraging renewables within emission reduction strategies offers businesses the promise of offsetting today’s fluctuations in energy pricing and increasing sustainability.
Further, once companies have an established energy management program in place, the focus shifts to their supply chain partners and manufacturers in an effort to reduce their greenhouse emissions and embrace renewable resources. The journey doesn’t end with an individual organization, as every partner in the business ecosystem impacts environmental and sustainability goals.
Lead image credit: CC0 Creative Commons | Pixabay