Solar and wind costs have reached a milestone in the energy market. It’s one that stands to serve as an inflection point for renewable energy adoption moving forward.
Solar Has Advantage
According to a study by the US Department of Energy, development costs for solar and wind energy – the cost of designing, permitting, financing and installing solar and wind systems – are now less than the cost of building for fossil fuels in many markets. Improved turbine technology accounts for this shift, as do solar hardware prices that are falling even faster as solar capacity additions outpace wind. The growth of solar is outpacing wind, due mainly to lower implementation costs.
From here, a snowball effect could be in the works. With green options in closer reach, a spike in cleaner energy adoption could heighten economies of scale, which will ultimately lower costs even further. Either way, this recent shift is making solar and wind more viable options for an increasing number of commercial businesses.
Green Energy is Now Affordable
“Despite recent executive moves towards coal and away from a ‘green economy,’ there are a number of market drivers compelling businesses to adopt green energy,” said Dailey Tipton, Vice President for Evolution Energy Partners. “With capital requirements for solar and wind farms becoming competitive with fossil fuels, we expect to see more businesses pulling the trigger if they are considering onsite generation. Recently in Rhode Island, construction of a gas turbine plant was cancelled, sighting cost of green energy construction as a driver.”
Industrial Companies Going Green
Not all market drivers are tied to dollars and cents. Commercial and industrial companies are facing increased social pressure to consider green energy. More than ever before, Evolution Energy Partners’ clients are looking for cost-effective ways to improve their sustainable footprint, citing reasons such as economics, market demands or global citizenship. Historically, the cost of procuring energy supply from a renewable resource has been prohibitive. With the current near parity of development costs, meeting the increasing social demands for sustainability has become much more achievable depending on a customer’s specific goals. Tipton said, “The critical question to address revolves around term of contract, local vs national regulations and the need for ‘additionality.’”
As the renewables market continues to develop, there are increasing options to customize a client’s solution: Tipton said “the ability to purchase a specific percentage of a client’s load from renewable resource while procuring the balance from brown power in order to lower aggregate costs is a viable option.”
But even in scenarios where “going green” means spending more, Tipton considers the larger impact of their choices. “If we as a nation don’t start using green energy, we won’t continue driving trends that will eventually make green energy cheaper than fossil fuels. As new assets replace older ones –which is happening– it drives down costs, so every conversion counts. This isn’t a foolproof comparison, but I sometimes compare green energy adoption to electric cars: Early adopters helped neutralize costs. As a result, we’re seeing more and more reliable, high-performance, electric cars on the road. It’s a huge win for consumers and the environment.”
He also points out that, with some initiative, companies that adopt green energy don’t have to wait for prices to drop to start earning back some or all their investment.
“An increasing number of American consumers are making conscious purchasing decisions,” Tipton says. “For that reason, we always encourage customers to promote the fact that they use green energy. In today’s marketplace, going green can win you new customers, letting you earn back some, all, or even more of what you’re spending on renewable energy. We specifically see this when the organization is driving business from a younger population who are focused and committed to a sustainable future”
Companies interested in achieving their energy and sustainability goals and contributing to the critical shift toward green energy should reach out to Evolution Energy Partners. We can provide more insights on initial costs relative to long-term savings across the board. To learn more, contact us.