In this series, we explain the basics of transitioning to renewable energy, from the emerging opportunities, options and impacts, to the process of implementing onsite or offsite solutions.
Today, many large and mid-sized manufacturers have made public commitments to reducing their carbon footprints. And more are establishing internal sustainability departments to tackle this problem every day. But few have a firm grasp on the benefits, the market, or their options for moving forward. So we’ll begin by walking through the opportunities becoming available now. The short version: Energy usage is climbing, and renewables will are now the most cost-effective and widely available option.
The worldwide renewables industry is now a $1.3 trillion market. Energy usage is expected to rise 30% by the year 2040, and the availability of renewable energy will expand to meet that need. More on the reasons why in a minute. Traditionally, utilities would have a monopoly over all of this new supply and demand. The reason? In the past, a company couldn’t afford to build a plant right next to its factory and directly power its operations. Only utilities had that capability, and so constructed large coal, nuclear, or gas power plants in rural areas far from the industries that would use it. That meant transporting the energy a vast, sprawling network of utility transmission and distribution lines. You purchased from the utility, because that was your only option. Now new technologies and accounting practices allow consumers to purchase power directly from renewable energy sources. Companies can install solar panels on their roofs, route power from a nearby wind farm, or purchase renewable energy credits on the open market. It’s widely available, supply is growing every day, and only becoming more affordable.
To fuel that growth, it’s expected that two-thirds of global power investment will be in renewables over the next 22 years, simply because renewables will become the lowest-cost source of new energy generation. According to a 2018 report by the International Renewable Energy Agency (IRENA), renewable energy sources are set to be consistently cheaper than traditional fossil fuels by 2020. Between 2010 and 2017 the cost of onshore wind fell 23% and the cost of solar dropped by 73%. If the current trend continues, onshore wind and solar could consistently cost as little as $0.03 per kWh by 2020, beating out the going rate of $0.05 per kWh for traditional fossil fuels.
Thousands of corporations, institutions, and local governments have pledged to cut their carbon emissions, creating a massive new demand for renewables. For the most part, that stems from corporations rushing to cover their owned and operated facilities with clean energy. However, according to Mckinsey & Co: “The typical consumer company’s supply chain generates far greater social and environmental costs than its own operations, accounting for more than 80 percent of greenhouse-gas emissions.” As companies meet their 100% renewable targets on owned and operated facilities, which many are already achieving, their next step will be to mitigate supply chain emissions.