Everything You Need To Know for Successful Renewable Energy Procurement in 2020
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- Feb 20, 2020 11:08 pm GMT
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The global market for corporate renewable energy surged in 2019, and experts expect significant growth throughout this year.
Demand for renewable energy procurement is rising as pressure from both inside and outside of the private sector is encouraging businesses to commit to sustainable and eco-friendly power sources. At the same time, growth and new investments in the energy market are making renewable power cheaper than ever before — further encouraging clean energy adoption.
However, while signs point to continued increase for renewable energy, there are new trends that energy professionals and industry stakeholders will need to be aware of.
Here is everything you need to know to build a successful renewable energy procurement strategy in 2020.
The State of the Renewable Energy Market
The renewable energy market continues expanding, with gains expected to continue throughout the year and the rest of the decade. The biggest winners of the market expansion have been wind and solar, with breakthroughs — like offshore wind and solar and improved storage technology — encouraging further adoption and development.
The extension of the existing PTC tax credit for wind — and the credit's coming phase-out — has also inspired a flurry of new growth, increasing capacity and further reducing energy costs.
Other renewables — including geothermal and hydroelectricity — have also experienced expansion, although not as significant as wind and solar. Geothermal is likely to rise in the future, especially in areas like California and the American West. The U.S. government looks to clear new land for geothermal development, including public land currently under protections that have prevented construction.
Environmentalist criticisms of hydroelectricity, however, along with new research that demonstrates the energy source may become less efficient as temperatures rise, are likely to keep the growth of hydro limited.
Renewable Energy Procurement Trends in 2020
Traditionally, tech giants that could afford experimentation with large-scale renewables have spearheaded clean energy adoption. This phenomenon is beginning to change. Pressure from different factors — like increased awareness of climate change, the "Greta Thunberg effect," new regulations and increased availability of renewables — is encouraging businesses of all sizes to start adopting renewable energy in earnest.
The rise of green power is also continuing to attract unlikely investors — including oil and gas companies like ExxonMobil and Occidental Petroleum.
As a result, renewable energy procurement can be valuable for companies of any size. Research has shown that energy procurement expertise can help businesses reduce electricity costs by a little more than half a cent per kilowatt-hour — which, assuming average power use, results in savings of around $45,000 over three years. Understanding the clean energy field could provide further ways to optimize spending.
The growing availability of power purchase agreements (PPAs) in both the U.S. and Europe is likely to provide new, potentially cheaper electricity sources for businesses. PPA prices are expected to decrease further as the market expands, making renewable energy an even more attractive proposition for enterprises looking to save money or commit to sustainable energy without spending too much.
Advancing technology may further improve prices — especially the cost of solar energy. The growth of solar has slowed significantly due to the expenses imposed by storage technology — solar batteries have traditionally been expensive, bulky and not particularly high-capacity. The demand for solar power has changed this. Now, innovations resulting in cheaper-than-ever solar cells and the launch of large-scale, grid-connected storage projects are on track to make this technology more practical both at grid-level and in more localized systems.
Demand for Renewable Energy Procurement Continues to Grow
The market for corporate renewable energy will continue its rapid increase through this year and into the foreseeable future. Inspired by outside pressure from climate activists, changing consumer preferences and the decreasing cost of renewables, businesses are becoming more and more encouraged to procure green power.
Procurement experts and energy professionals should be aware of the trends that will guide the renewable market this year. Adoption is becoming increasingly popular with businesses of all sizes as growth drives down prices of PPAs. New technology and larger applications of power storage also have the potential to reduce costs further, potentially increasing adoption rates.