Which Clean Energy Solutions to Choose?
So many choices, so little time
It is an exciting time to explore energy: there is an unprecedented range of affordable energy sources and an ever-expanding menu of ways to purchase it. And with an increasing focus on companies’ environmental, social and governance (ESG) programs, there is more reason than ever to find a way to access clean energy quickly and efficiently. But with change come challenges. Although the energy market has become more complex, and many decision-makers understand the options available, knowing how to implement those clean energy solutions remains challenging.
Energy buyers are well informed
Any observer of the energy market has seen complexity increase dramatically during the past couple of decades as utilities’ business models have evolved and renewables have come into their own pricewise. Where there was little to no choice in suppliers or tariffs a few decades ago, energy purchasing is now complex. It requires expertise to understand the increasingly broad range of options available, develop an appropriate strategy, and implement purchase agreements. Corporate energy buyers cannot simply assume that their local utility will offer the right electric mix at the right price.
The good news is that energy purchasing decision-makers generally feel they are informed about the plethora of energy options available, despite the increased complexity. More than four in five of those surveyed felt informed about the energy options out there (81 percent), although apparently that is not enough.
There is a disparity between decision-makers’ perceived high levels of knowledge in the energy options available to them and their ability to actually implement energy solutions in their organizations.
Companies lack internal knowledge and resources
The survey found that a lack of internal knowledge and resources are key barriers that prevent organizations from making further investments in renewable energy. Of the energy buyers surveyed, nearly two in five (38 percent) cited lack of internal knowledge and a third (33 percent) cited lack of expertise to evaluate options.
But these aren’t the only constraints. About a quarter of all respondents (24 percent) cited lack of internal management capacity; that is, they may feel they understand the options and have the expertise to evaluate the offers, but they are simply not staffed in a way that enables that internal expertise to be fully utilized.
Lack Expertise to Evaluate Options
So how is the gap filled?
For many organizations, energy consultants fill in the gap. More than half (56 percent) of all organizations surveyed use an external energy consultant and an additional third (33 percent) plan to engage an energy consultant in the next five years.
Use an external energy consultant
Plan to engage an energy consultant
All energy is not created equal.
Companies seek quality, but some are wary of cost
When it comes to choosing a specific provider to implement a company’s renewable energy strategy, decision-makers said they are seeking high-quality partners, with almost all (95 percent) looking for certifications or quality seals. Yet while energy decision-makers have high expectations for their partners in renewable energy implementation, it may be more difficult to encourage them to spend to achieve these high expectations.
More than two-thirds indicated that their companies are willing to pay a premium for quality (68 percent), and larger companies (2,000+ employees) said they are much more willing to pay a premium for quality (88 percent) than companies with fewer than 2,000 employees (60 percent), which were less willing, or perhaps able, to pay the premium.
Industry Point of View
CEO of BayWa r.e. Power Solutions, Inc.
Brad is the CEO of BayWa r.e. Power Solutions, a leading C&I developer and C&I and utility-scale solar and storage systems engineering, procurement and construction (EPC) provider in the U.S.
"We’re seeing a welcome trend in the business community, where more and more companies are looking to reduce their carbon emissions and move toward a greener, more sustainable operational footprint. Of course, they also appreciate the attractive economics of an onsite solar-plus-energy storage solution that show up on their bottom lines. More sophisticated corporate energy buyers also realize that storage has additional cost-savings benefits, such as demand-charge management and arbitrage options. As renewable energy providers, the key is to understand the customer’s energy needs and then design and build a quality system that best fits those needs. As part of this, taking a collaborative, transparent approach and walking a customer from the preconstruction phase all the way through the design-build-commissioning process reduces the risk of misconceptions and misunderstandings—and helps keep the project on budget and on deadline. This approach may seem obvious, but it’s surprising how many of our competitors' projects have challenges because the contractor/developer and the customer fail to establish and maintain clear and effective communication channels in coordination with their facility operations."
Corporate energy buyers are increasingly well-informed about their clean energy options, but do not always have the internal resources to make fully-informed decisions or initiate corporate energy procurement.
This highlights the opportunities for clean energy providers and consultants alike. The buyers are sophisticated but need easy ways to analyze and compare options, whether it involves using tools or hiring consultants.
While corporate buyers seek out energy partners with solid financial underpinnings and a reputation for quality, they are also keen to maintain a tight grip on spending. That desire to manage cost has the potential to slow the deployment of renewables needed to close the gap between the current trajectory and the rapid reductions in emissions needed to avoid escalating the climate disaster. So, while industry bodies such as REBA are playing an essential role in helping first-time clean energy procurers navigate the complex purchase, any incentives or cost reductions in the industry will also play a key role.