Understand and Build a Renewable Energy Strategy
Environmental Defense Fund
Developing a renewable energy strategy can be complicated, but it is a critical part of a broader sustainability strategy. By understanding your options and mapping the renewable energy strategy to your broader targets, you can find a solution that supports your company.
A renewable energy strategy defines your company’s energy consumption goals and how you plan to achieve them. To build a renewable energy strategy you need to understand the different ways to access renewable energy and determine the right energy mix for your operations. A renewable energy strategy plays an important role in realizing your science-based targets and other commitments, such as net zero.
Though building a renewable energy strategy is just one part of a broader commitment to sustainability, by starting with a strong renewable energy strategy you can lay the foundation for a more sustainable future. Additionally, many renewable energy solutions are now cost neutral or positive when compared to traditional energy sources, which means that you can often reduce energy costs over time.
The first step in building a successful renewable energy strategy is to set clear, achievable goals. This means defining what you hope to accomplish with your energy initiatives and establishing metrics to measure progress over time. Some common goals for renewable energy strategies might include:
- Reducing greenhouse gas emissions
- Lowering energy costs
- Increasing energy independence and resilience
- Boosting the company’s reputation as a sustainability leader
You should also consider how a renewable energy strategy can support your other ESG goals. For example, can your purchase of renewable energy support historically disadvantaged communities? Similarly, you should try to make sure that renewable energy projects your company supports are environmentally sound. That is, you should keep in mind the potential for environmental harms such as deforestation, destruction of wetlands, and obstruction of migratory corridors.
Once you have established your goals, it is important to communicate them clearly to your stakeholders.
The next step is to evaluate the different implementation options. There are several options to consider. The right solutions for your company will depend on your needs, location, and available incentives, among other factors.
On-site Renewable Energy Systems
This involves installing renewable energy systems on your own property, such as solar panels or wind turbines. On-site systems can be a great option if you have ample space and the capital to invest in the equipment. Energy as a Service (EaaS) companies can help you build these systems with little capital down, instead recovering costs as the system generates energy.
Off-site Renewable Energy Systems
With this option, you can purchase renewable energy from a third party, such as a utility or a renewable energy developer. Off-site systems can be a good choice if you have limited space or resources to invest in on-site systems. The mechanisms for purchasing off-site renewable energy can vary, but the most common include Power Purchase Agreements and Renewable Energy Credits.
Renewable Power Purchase Agreements (PPAs)
A PPA is a contract between a renewable energy provider and a customer that allows the customer to purchase renewable energy at a fixed price for a set period. It can be a cost-effective way to access renewable energy without the upfront investment required for on-site systems. In addition, renewable PPAs support further renewable energy project development.
Renewable Energy Credits (RECs)
RECs are certificates tied to renewable energy generation. You can purchase RECs to offset your energy use and support renewable energy development. RECs are a convenient and accessible way to purchase renewable energy, but other options like PPAs often have stronger environmental benefits. This is because the REC market (in 2023) is saturated, reducing the amount of capital returned to developers and limiting the additionality created by purchasing RECs.
Green Tariffs and Utility Green Energy
Green tariffs are offered by utilities to corporate energy buyers in regulated markets and allow you to buy green energy at a bundled rate. The exact mechanisms vary, but as a company you enter into an agreement with the utility to receive a certain percentage of your energy from renewable sources. Green tariffs are a convenient way to start transitioning to renewable energy, especially for smaller companies. But options that create additionality, such as PPAs or on-site renewables, have a greater climate impact.
You can also consider other options such as energy storage, microgrids, and community solar programs. These options provide flexibility and accessibility when there are not enough resources or space to invest in your own renewable energy system.
Energy storage and microgrids help improve the reliability and resilience of renewable energy systems, while green tariffs and community solar programs provide a cost-effective way to access renewable energy.
The cost of implementing a renewable energy strategy will vary depending on the specific approach you take. However, in many cases, renewable energy can be cost-competitive with traditional energy sources over the long term. There are a variety of financing opportunities available to help you fund renewable energy projects.
There are a variety of government grants tax credits available for businesses that invest in renewable energy. For example, in the U.S. the Investment Tax Credit (ITC) provides a credit of up to 30% of the cost of solar energy systems installed between 2022 and 2032. Additionally, some other financing options include green bonds, energy service agreements (ESAs), and on-bill financing. Green bonds are specifically designed to finance environmentally sustainable projects, while ESAs and on-bill financing allow you to pay for energy efficiency and renewable energy improvements over time. For more details on these options refer to the EPA’s Clean Energy Financing Toolkit under the resources section.
You will need to weigh these many financing options alongside your implementation options to identify the best renewable energy strategy for your company’s needs.
Building a renewable energy strategy can present challenges such as significant upfront costs, choosing the right implementation option that fits your specific needs, variable energy production, and navigating the complex financial and regulatory landscape. This complexity can make it difficult to develop a robust, effective renewable energy strategy. But by reading this guide and the resources here you are on the right path to creating a renewable energy strategy that supports your business and the environment.
- U.S. Department of Energy: Solar Investment Tax Credit
- Energy Storage Association: Why Energy Storage?
- EPA: Utility Green Tariffs
- NREL: Microgrids
- US Department of Energy: Community Solar Basics
- U.S. Department of Energy: NREL Study Identifies the Opportunities and Challenges of Achieving the U.S. Transformational Goal of 100% Clean Electricity by 2035
- NREL: Framework for project development in Renewable Energy Sector
- NREL: Current and Future Costs of Renewable Energy Project Finance Across Technologies