Five Reasons You Should Consider Generating Your Own Green Energy
Over the past six months, oil prices have plunged more than 50 percent, renewable energy company asset values have taken an even bigger dive, and financial institutions have collapsed completely, leading to a worldwide credit crunch.
Is this really the best time for your company to be thinking about generating renewable energy onsite?
Before answering, consider these forecasts by the International Energy Administration (IEA) in its recent World Energy Outlook 2008:
-- Energy is going to get more expensive, with oil reaching $200 per barrel by 2030.
-- Carbon-intensive energy, which comprises well over half of the energy in the United States, is going to get much more expensive-in part due to a cap on carbon that could reach $180 per ton.
-- The price and supply of fossil fuels will continue to be volatile.
In that context, it's clear: Companies can't afford not to think about investing in renewable energy, especially those with high energy-to-raw-material cost ratios, such as firms in agriculture, food processing, metal refining, paper manufacturing, and chemicals.
What follows are five key reasons why you should consider generating renewable energy onsite to power up your business.
Renewable Energy is Beating the Grid
In some regions, the cost of generating onsite renewable energy is already beating electricity bought from the grid. This "grid parity" is currently happening in places like California, Hawaii and Japan, where electricity costs are high and renewable resources are abundant. By 2012, Australia and Italy will likely achieve grid parity, and by 2015 much more of the United States will as well.
Threatened Supply and Hungry Demand Build the Case for Self-Production
Oil production is expanding to regions with increasingly unstable governments and crippling poverty, such as Iran, Russia, and Qatar, which together hold 56 percent of known new oil reserves.
On the demand side, the world is hungrier than ever: Even with the extremely high per-capita oil needs of OECD countries, fully 80 percent of projected new demand is coming from China, India, and the Middle East, while 1.6 billion people around the world still go without any electricity. As for logistics, the bulk of oil moves through international waters where there is growing banditry, such as the $100 million oil tanker heist by Somali pirates that is still unresolved. The result: The fossil fuel supply chain poses tremendous uncertainty on both price and physical delivery.
Carbon Legislation is Pushing Up Costs
Carbon cap-and-trade regulations, in some form or another, are descending on economies around the world. Already underway for several years, the European Union Emission Trading Scheme charges European heavy emitters $21.39 for every ton of carbon above their cap. In October, the U.S. inaugurated its first cap-and-trade program, the Regional Greenhouse Gas Initiative (RGGI), which regulates utilities in the Northeast with a cost of $3.07 per ton. Regulation is just around the corner for other parts of the U.S., as well as for China and Canada. The IEA, an energy policy advisor to 28 member countries, predicts that by 2030, the average carbon prices will climb to $90 or even $180 per ton.
In addition to cap-and-trade regulations, low-carbon product standards and border tax adjustments also will put pressure on supply chains and buyer demand. All this means that carbon-intensive energy is a growing liability, whether at your own operations, upstream with suppliers, or downstream with the use of the products you sell.
Incentives for Onsite Renewables Production are Rising
"Feed-in tariffs," which require utilities to connect small, onsite renewable projects to the grid and pay their generators for surplus energy generated, are gaining traction. Countries such as Germany and Spain have adopted such policies successfully, and others like the U.S. (in California) and China are in the midst of implementing and scaling them up.
Creative Finance Options Abound
There are numerous ways to gather the resources to make onsite projects happen. Thanks to the grid, energy service companies can provide some or all of the financing needed. The grid also enables creative partnerships. For example, in partnership with Xcel Energy, Colorado's Aspen Skiing Company recently financed $1.1 million for a 147-kilowatt solar energy array. Of the energy produced, a third goes to a local school, and two-thirds is sold back to the grid, with profits given to Aspen Skiing Company.
There is a good chance you will find financing for onsite renewable energy projects by exploring partnerships with foundations or exploring funding available in carbon markets for carbon-offsets projects.
With the energy crisis likely to outlast the current economic crisis, investing in onsite renewable energy generation can insulate your company from the shocks, scarcity, and rising prices of energy. And with recent political discussions about a "New Green Deal" and a climate change "Manhattan Project," it's even possible that governments will add to or reconfigure the $300 billion in energy subsidies around the world.
So, in response to the question we started with: Is this really the best time for your company to be thinking about generating renewable energy onsite?
Yes, now more than ever.
Source
Author, Ryan Schuchard
Ryan Schuchard is Business for Social Responsibility's environmental research and development associate.
Is this really the best time for your company to be thinking about generating renewable energy onsite?
Before answering, consider these forecasts by the International Energy Administration (IEA) in its recent World Energy Outlook 2008:
-- Energy is going to get more expensive, with oil reaching $200 per barrel by 2030.
-- Carbon-intensive energy, which comprises well over half of the energy in the United States, is going to get much more expensive-in part due to a cap on carbon that could reach $180 per ton.
-- The price and supply of fossil fuels will continue to be volatile.
In that context, it's clear: Companies can't afford not to think about investing in renewable energy, especially those with high energy-to-raw-material cost ratios, such as firms in agriculture, food processing, metal refining, paper manufacturing, and chemicals.
What follows are five key reasons why you should consider generating renewable energy onsite to power up your business.
Renewable Energy is Beating the Grid
In some regions, the cost of generating onsite renewable energy is already beating electricity bought from the grid. This "grid parity" is currently happening in places like California, Hawaii and Japan, where electricity costs are high and renewable resources are abundant. By 2012, Australia and Italy will likely achieve grid parity, and by 2015 much more of the United States will as well.
Threatened Supply and Hungry Demand Build the Case for Self-Production
Oil production is expanding to regions with increasingly unstable governments and crippling poverty, such as Iran, Russia, and Qatar, which together hold 56 percent of known new oil reserves.
On the demand side, the world is hungrier than ever: Even with the extremely high per-capita oil needs of OECD countries, fully 80 percent of projected new demand is coming from China, India, and the Middle East, while 1.6 billion people around the world still go without any electricity. As for logistics, the bulk of oil moves through international waters where there is growing banditry, such as the $100 million oil tanker heist by Somali pirates that is still unresolved. The result: The fossil fuel supply chain poses tremendous uncertainty on both price and physical delivery.
Carbon Legislation is Pushing Up Costs
Carbon cap-and-trade regulations, in some form or another, are descending on economies around the world. Already underway for several years, the European Union Emission Trading Scheme charges European heavy emitters $21.39 for every ton of carbon above their cap. In October, the U.S. inaugurated its first cap-and-trade program, the Regional Greenhouse Gas Initiative (RGGI), which regulates utilities in the Northeast with a cost of $3.07 per ton. Regulation is just around the corner for other parts of the U.S., as well as for China and Canada. The IEA, an energy policy advisor to 28 member countries, predicts that by 2030, the average carbon prices will climb to $90 or even $180 per ton.
In addition to cap-and-trade regulations, low-carbon product standards and border tax adjustments also will put pressure on supply chains and buyer demand. All this means that carbon-intensive energy is a growing liability, whether at your own operations, upstream with suppliers, or downstream with the use of the products you sell.
Incentives for Onsite Renewables Production are Rising
"Feed-in tariffs," which require utilities to connect small, onsite renewable projects to the grid and pay their generators for surplus energy generated, are gaining traction. Countries such as Germany and Spain have adopted such policies successfully, and others like the U.S. (in California) and China are in the midst of implementing and scaling them up.
Creative Finance Options Abound
There are numerous ways to gather the resources to make onsite projects happen. Thanks to the grid, energy service companies can provide some or all of the financing needed. The grid also enables creative partnerships. For example, in partnership with Xcel Energy, Colorado's Aspen Skiing Company recently financed $1.1 million for a 147-kilowatt solar energy array. Of the energy produced, a third goes to a local school, and two-thirds is sold back to the grid, with profits given to Aspen Skiing Company.
There is a good chance you will find financing for onsite renewable energy projects by exploring partnerships with foundations or exploring funding available in carbon markets for carbon-offsets projects.
With the energy crisis likely to outlast the current economic crisis, investing in onsite renewable energy generation can insulate your company from the shocks, scarcity, and rising prices of energy. And with recent political discussions about a "New Green Deal" and a climate change "Manhattan Project," it's even possible that governments will add to or reconfigure the $300 billion in energy subsidies around the world.
So, in response to the question we started with: Is this really the best time for your company to be thinking about generating renewable energy onsite?
Yes, now more than ever.
Source
Author, Ryan Schuchard
Ryan Schuchard is Business for Social Responsibility's environmental research and development associate.
Comments
Ray of light: This way to the recovery -- solar power, solar jobs
The U.S. housing sector remains in deep recession. Consumer spending is down. Business investment remains lackluster, with industrial production indicators hitting new lows monthly. And lay-offs have hit alarming levels.
Against this backdrop it's understandable if one holds a not-so-optimistic view regarding the U.S. economy and the markets for early 2009: the economy's fundamentals are weak, and it's going to take a lot of stimulus, fiscal and otherwise, to turn them around.
Nevertheless, there are bright spots -- in this case literally, as well as macroeconomically -- regarding the U.S. economy of tomorrow.
This way to the future
One small, but significant data point: despite the plunge in oil prices to around $50 per barrel, demand for solar energy and solar panels remains strong. Demand for solar energy systems increased 45% in 2007 and is expected to register another impressive gain in 2008, The New York Times reported.
About 25,000-35,000 workers -- installers, manufacturers, distributors, project developers, and material suppliers -- are currently directly employed in the solar energy sector, which is expected to grow to more than 110,000 in 2016, according to Solar Energy Institute Association data, The Times reported.
And here's an equally important stat: the jobs pay between $15-30 per hour, with many solar companies offering health benefits, The Times reported.
'Scale it up, and good things result'
Economist David H. Wang said those who view the 110,000-solar-job projection as small are missing the point: those totals don't assume any money from the Obama Administration's upcoming fiscal stimulus package or its energy bill/program, which will likely follow it.
"Assume continued technology progress in solar cells. Now multiply that by efforts to increase renewable energy sources in public schools and buildings. Now add an enhanced, but not an unreasonable, federal tax credit. Bingo. I think you can see that goods things will begin to happen from a domestic jobs and a GDP standpoint," Wang said. "If we add wind, auto sector transformation, and electric grid improvements to the equation, I think you can see that renewable energy has the ability to be a major source of good-paying, domestic jobs, for decades. Scale it up, and good things result."
Wang said a key factor will be the role energy efficiency plays in the Obama Administration's infrastructure and energy bills. For example, if the new administration gives school/public building energy efficiency a low priority, the seed-money effect on the solar industry will be less. If it is given a high priority, "it will create a surge of players in the field increasing research efforts," which will speed solar tech advances, further lowing solar costs, "which will really drive increased solar use and installation."
Energy Policy/Economic Analysis: In the very near future, your son or daughter may be a solar product designer, engineer, or solar product installer. Or perhaps you will become one yourself, with additional training in a career shift. Add wind energy, a revamped auto sector, mass transit expansion, and export sales of the above technologies -- some may become the envy of the world -- and one can begin to see the beginnings of the U.S. economic recovery and sustainable growth.
Against this backdrop it's understandable if one holds a not-so-optimistic view regarding the U.S. economy and the markets for early 2009: the economy's fundamentals are weak, and it's going to take a lot of stimulus, fiscal and otherwise, to turn them around.
Nevertheless, there are bright spots -- in this case literally, as well as macroeconomically -- regarding the U.S. economy of tomorrow.
This way to the future
One small, but significant data point: despite the plunge in oil prices to around $50 per barrel, demand for solar energy and solar panels remains strong. Demand for solar energy systems increased 45% in 2007 and is expected to register another impressive gain in 2008, The New York Times reported.
About 25,000-35,000 workers -- installers, manufacturers, distributors, project developers, and material suppliers -- are currently directly employed in the solar energy sector, which is expected to grow to more than 110,000 in 2016, according to Solar Energy Institute Association data, The Times reported.
And here's an equally important stat: the jobs pay between $15-30 per hour, with many solar companies offering health benefits, The Times reported.
'Scale it up, and good things result'
Economist David H. Wang said those who view the 110,000-solar-job projection as small are missing the point: those totals don't assume any money from the Obama Administration's upcoming fiscal stimulus package or its energy bill/program, which will likely follow it.
"Assume continued technology progress in solar cells. Now multiply that by efforts to increase renewable energy sources in public schools and buildings. Now add an enhanced, but not an unreasonable, federal tax credit. Bingo. I think you can see that goods things will begin to happen from a domestic jobs and a GDP standpoint," Wang said. "If we add wind, auto sector transformation, and electric grid improvements to the equation, I think you can see that renewable energy has the ability to be a major source of good-paying, domestic jobs, for decades. Scale it up, and good things result."
Wang said a key factor will be the role energy efficiency plays in the Obama Administration's infrastructure and energy bills. For example, if the new administration gives school/public building energy efficiency a low priority, the seed-money effect on the solar industry will be less. If it is given a high priority, "it will create a surge of players in the field increasing research efforts," which will speed solar tech advances, further lowing solar costs, "which will really drive increased solar use and installation."
Energy Policy/Economic Analysis: In the very near future, your son or daughter may be a solar product designer, engineer, or solar product installer. Or perhaps you will become one yourself, with additional training in a career shift. Add wind energy, a revamped auto sector, mass transit expansion, and export sales of the above technologies -- some may become the envy of the world -- and one can begin to see the beginnings of the U.S. economic recovery and sustainable growth.