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Money Talks with Renewable Energy

Money Talks with Renewable Energy

Talking about the weather has never been more controversial.

Climate change has become the hot button issue of our time on both sides of the aisle, with politicians arguing passionately both in support, and in opposition, to measures that would address the gradually warming temperatures that we’re seeing worldwide. At the same time, world leaders are arguing over what steps, if any, to take, what agreements to focus on, what renewable energy sources to support, and what to do today about something that may take many generations yet to play out.

Whatever happens in Washington, renewable energy has arrived in corporate America in a big way, with 63 percent of Fortune 100 companies and nearly half of the Fortune 500 having set at least one clean energy target this year, according to a new study sponsored by the World Wildlife Fund. This includes efforts by corporations to reduce their greenhouse gas emissions, increase energy efficiency at their facilities and convert their systems to rely more on renewable sources of energy.

And this has happened as the result of renewable energy providers and advocates speaking a language that resonates almost universally in C-suites and boardrooms worldwide: Cost.

“The story is that the cost of building new solar and wind systems, in particular, has come down sixty, seventy, eighty percent in the last six or seven years,” says environmental consultant Andrew Winston, the author of The Big Pivot: Radically Practical Strategies for a Hotter, Scarcer and More Open World. “And it's not hard to leap from there to, ‘Hey, [renewable energy] is now cheaper. This is something that we as a company can do.’"

Projections of world energy consumption by fuel. Source: U.S. DOE

In many cases, according to Winston, renewable energy has simply gotten too cheap for corporations to ignore.

“You look at the big tech companies, the big retailers,” he says. “Apple's at a one hundred percent renewable now. Walmart buys a lot. The military buys a ton. Google buys gigawatts at a time. It doesn't mean at a given moment that they're off the grid, but for the most part it means that on a sunny day the energy they've bought is way more than they need that day. On a wintry day or a cloudy day it's less, so across the year they've bought as many renewable kilowatt hours as they use.”

New Tools

As a result, a new universe of energy tracking and efficiency tools have sprung up to help corporations tap into these new opportunities. Bractlet, for instance, is a startup based in Austin, TX, that has developed a set of building energy analysis tools designed to help facility owners and corporate managers reduce their energy costs by tracking and identifying both wasted energy as well as efficiency opportunities.

“The big thing that we’re seeing is companies and building owners making decisions about their facilities—whether it's deciding to retire a heating system, or replacing air handling units, or upgrading building automation systems—because they have to, not because they want to,” says Alec Manfre, Braclet’s CEO and cofounder. “All of these different things that they’re spending capital on that they hope are going to return some money for them. But when they’re making these decisions, often they are basing them off of pretty limited, outdated information.”

Bractlet’s solution is to incorporate a laundry list of sensor-based data points into building maps that make it easy for business leaders to visualize and describe the potential cost savings associated with each possible efficiency upgrade. Just taking the capital that is already allocated to a company’s buildings and facilities budget and determining where in the portfolio that capital can be allocated more efficiently can have a big impact, Manfre says, trimming energy spend by 10 to 25 percent on average just by reprograming existing systems and optimizing existing equipment.

“Then, when you're looking at the portfolio side, you then can strategically say, ‘All right, I have $30 million to invest in my buildings; where should I spend it?’ I might have a lot of fast payback opportunities that would yield great energy savings, so maybe I take some of that savings and help offset capital costs at another building that might need a lot of work but is not going to have as good a payback. Companies can now start allocating cash in a very intelligent way to maximize returns, but also maximize energy efficiency across their properties.”

Options Rule the Day

Some companies are even starting to look beyond the grid when consider their energy expenditures, because of the way the energy market has grown up in this country over the last century or so.

In reality, energy budgeting comes down to two choices—a customer either owns their own production system (e.g. solar panels, wind turbines, etc.) or they purchase their energy on the grid from a third party that creates the power and then delivers it to them the old-fashioned way. It stands to reason, then, that any energy purchased from a third-party is going to be more expensive than any that is produced “in house” by a company’s own energy producing asset due to basic economics.

Today this means that customers have more choices than ever when allocating their energy dollars, because “producing their own” has gotten so cheap. What was once cost prohibitive for all but the best capitalized corporations is now well within reach for almost everyone, and that is changing the math behind renewable energy.

According to Noah Kirsch, director of finance at Wunder Capital, a firm based in Boulder, CO, that is dedicated to funding solar power installations using a tech-based underwriting system to identify the best investments, the cost of a solar panel installation has fallen by orders of magnitude since the technology first went mainstream in the 1970s. Today it is far easier for corporations and other large energy customers to justify the investment.

“Fundamentally the economics is driving these opportunities,” he says. “The sales that we're seeing happen are being driven by basically people going in and saying, ‘Do you want to save money?’ We're not seeing sales being driven by, ‘Hey, do you want to do something good for the Earth?’ That is something that might come in to play but it's really not a focus right now.”

And, when it comes to corporate finance, that is enough to drive a major shift in renewable energy usage.

Tim Sprinkle is an independent writer.

The story is that the cost of building new solar and wind systems, in particular, has come down sixty, seventy, eighty percent in the last six or seven years. Andrew Winston, author

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