rolf nordstrom forbes

GPI President and CEO Rolf Nordstrom wrote “The Clean Energy Revolution Your Business Might Be Missing” for the Forbes Business Council website where it was originally published. Nordstrom recently became a council member.

If the quiet energy revolution taking place, particularly in the electric sector, has gone unnoticed by you, your company is likely missing out on critical economic and consumer benefits.

You may have had your head down, focused on growing and sustaining your business as the ground shifted. The thing about tectonic plates is that you don’t always feel it when they move, but then suddenly the world transforms.

Two macro trends are driving epochal change in something that our economy can’t do without but people seldom think about: electricity.

Consumers only spend an average of eight minutes a year interacting with their utility provider online — usually because their bill seemed high or the power went out. So, you might think that “consumer pull” isn’t relevant in the electric sector. But times have changed.

Millennials are now the largest demographic block in the United States. Just as their preferences are impacting most other markets, their desires for clean energy and concerns over climate change are reshaping how we produce electricity in this country, which helps explain why renewables are forecasted to be the fastest-growing source of electricity generation.

The Edison Electric Institute (the trade association for investor-owned utilities) polled consumer attitudes on renewable energy and found that a whopping 70% want 100% renewable electricity “in the near future,” and 51% say they want it even if it raises their energy bills by 30%. While the national goal — for both technical and political reasons — is more likely to be net-zero carbon emissions rather than a certain percent renewable, the point is that consumers want clean energy even if they don’t know all the details of getting there.

By “consumers,” I don’t just mean individuals or households. For the first time in 2015, companies signed more purchase agreements for wind power than utilities did. Two-thirds of Fortune 100 and nearly half of Fortune 500 companies have set ambitious renewable energy targets, according to the Business Renewables Center, including Google, Ikea, Apple, Facebook, Microsoft, Coca-Cola, Nike, GM and Lego. More cities and states are setting ambitious 100% carbon-neutral or 100% renewable goals, too. I predict this trend will continue into 2021 and beyond.

The ‘New King’ Of Electricity 

On release of its latest World Energy Outlook, the executive director of the International Energy Agency, Fatih Birol, said solar will become the “new king of the world’s electricity markets” and will continue setting deployment records “every year after 2022.”

The dramatic decline in the cost of renewable energy is a key driver in the rising preference for wind and solar across market segments, particularly for businesses, utilities, states and cities. Just to use one striking example, Northern Indiana Public Service Co. announced in the fall of 2018 that building renewable energy will be cheaper than keeping its coal plants open. It plans to build a portfolio of solar, storage and demand management to move from 65% coal generation to 15% by 2023 and none by 2028. That’s breathtakingly fast. Many utilities are doing the same, seizing the low cost of renewables and appealing to consumer preferences.

Because wind and solar have zero fuel cost, when they are available, they outcompete electricity generated by traditional coal plants — so much so that renewable energy is rapidly becoming the hub around which I believe the rest of the system will be designed.

For example, utilities like NextEra and others are increasingly building hybrid resources, composed of some combination of wind, solar and energy storage, and optimizing the interactions among them with sophisticated software and analytics that enables them to behave like a single conventional power plant and provide all kinds of services to the electric grid in addition to energy. This explains why about a third of all proposed solar projects in the U.S. are being planned with energy storage.

So, what does all this mean?

It means we are headed for a world powered increasingly by reliable, dispatchable renewables (wind, solar and storage combined and optimized), supplemented with technologies like natural gas plants paired with carbon capture, hydrogen and, eventually, ultra deep geothermal using electronic pulse boring. In the future, I predict that renewable energy will be used to produce everything from hydrogen and ammonia to fuels from captured carbon monoxide and carbon dioxide.

It also means that you should probably find out from your utility, if you haven’t already, about how you, your company and your customers can benefit from the clean energy age.

If you’d like your company to take advantage of the clean energy transition, there are four main ways to do it:

  1. Buy clean power directly from wind and solar power suppliers.
  2. Buy renewable energy credits (RECs), which represent the clean attributes of renewable energy and are sometimes bought and sold independently of the power being produced.
  3. Work with your local utility to provide you clean energy.
  4. Install renewable energy on-site at your company.

These all come with pros and cons.

As a way to get started, here are some questions you can ask your utility:

  1. What clean power options do you offer, and at what terms?
  2. Is the renewable power I would be buying in addition to what’s already built or in development (that is, will my purchase stimulate additional clean power development?)?
  3. Who retains the value of the renewable energy credits?

If you want a deeper dive, the federal government worked with national labs and others to produce a thorough guide to walk you through these options.

 

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