COVID is drawing companies to reconsider their renewable energy options
Updated: Jul 23
Written by World Kinect Energy Services, GCP’s energy consulting partner
As the world continues to battle the COVID pandemic, it’s no secret that businesses across the globe are taking a hard look at their expenses and cutting costs wherever possible.
The world’s focus on the pandemic has also led companies to double down on other matters of pressing global import such as sustainability, driven by strong global demand for greenhouse gas reduction.
Depending on the industry, energy spend can be an enormous cost center and also contributor to greenhouse gas emissions. To further complicate things, it’s well known that the energy marketplace is notoriously difficult to navigate. Not every company has a dedicated in-house energy management team laser-focused on achieving cost-savings while hitting sustainability targets.
With large and small corporations alike taking active steps toward reducing their environmental impact, it is fair to ask – how can these companies afford to achieve their ambitious carbon reduction goals without breaking the bank? While it seems like rocket science, it is completely possible to reduce your energy spend and at the same time access 100% renewable energy.
The first logical step for most companies looking to reduce energy-related spend is to implement energy efficiency measures. Implementing an energy efficiency program is a low-risk way to achieve cost-savings and also has the positive side-effect of reducing a company’s greenhouse gas emissions.
Beyond energy efficiency measures, savvy companies are taking advantage of attractive renewable energy procurement strategies that save them money and in some cases, make them money.
As an example, because solar power has dropped so much in price, it is a wise investment for businesses looking to save money on their electricity bills. With federal tax incentives set to drop off of a cliff over the next few years, the market for solar power is blazing hot – even in areas not thought of as traditionally “sunny”. After 2021, the federal incentive drops to 10% from its current 26% level and no one wants to leave money on the table. Getting an onsite solar array up and running is cheaper now than it’s ever been. In effect, installing onsite solar power allows companies to hedge against future energy price increases. Once the system is paid for – the power is essentially free.
For companies that do not have an appetite to deploy capital upfront, Onsite Solar Power Purchase Agreements (PPAs) and Virtual Power Purchase Agreements (VPPA) are increasing in popularity. Put simply, an Onsite Solar Power Purchase Agreement allows a company to “lease” its site to a solar project developer who in turn sells that power to them at a heavily reduced rate. Onsite Solar Power Purchase Agreements allow companies to claim and visibly demonstrate usage of solar power while reducing their energy spend and carbon footprint.
These are just some of many, many ways that companies are navigating the current pandemic and coming out on top economically. Forward-thinking companies are investing in renewable energy and generating handsome returns as a result – effectively hedging against climate change, supply-chain risk, and future energy price increases.
If you’d like to learn more about ways you can achieve your cost-saving goals and sustainability goals at the same time, let’s talk! We will be hosting a webinar within the next few months to cover the basics and help you navigate your energy-related options.