By the end of 2014, renewables comprised an estimated 27.7 percent of the world’s power generating capacity, according to the Renewable Energy Policy Network for the 21st Century. That’s already enough to supply an estimated 22.8 percent of global electricity, and the disruption to the traditional energy supply system continues at a rapid pace. Driven by consistent downward price trends (at around 10 percent to 15 percent per year), solar, for instance, is reaching grid parity in high priced grid regions. This downward price trend is forecast to fuel the trajectory of renewables for several more years, which means continued disruption.
Here in the U.S., the renewables opportunity is gaining momentum as an increasing number of DER (distributed energy resources) incentive programs come to fruition, and organizations follow suit by experimenting with and adopting renewables. DERs consist primarily of energy generation and storage systems placed at or near the point of use, these systems encompass a range of technologies including solar, wind, battery, fuel cells, demand response, and more. Collectively, DERs can provide a portion of, if not all, the energy necessary to meet an organization’s power demands.
In our newly-released 2016 Energy and Sustainability Predictions: Findings from Leading Professionals report, 15 percent of respondents said they’re already leveraging DERs at a majority of their sites, 20 percent have already implemented DERs in pilot sites, and a full third said DERs are currently being considered in their organizations. Among those respondents that indicated a CapEx project was their smartest investment, 13 percent said DERs topped the list in 2015, up from just 8 percent in 2013.
That growth will continue as DER incentives available to organizations grow. Just last month, Congress extended the 30 percent solar incentive tax credit that was due to expire at the end of 2016. The incentive will now continue at this rate until 2019, and analysts at GTM Research and the Solar Energy Industries Association estimate that the tax credit could increase solar installations by 54 percent over the next five years.
From coast to coast, state power authorities and utilities are also working together to make DER opportunities more accessible and more affordable for energy consumers. Here are just a few recent examples of the state-level benefits being offered:
- In California, PG&E, Southern California Edison, and SoCalGas® offer a $1.07 per watt incentive for wind turbine, waste heat to power, and pressure reduction turbine initiatives. Emerging technologies like advanced energy storage and biogas adder projects are eligible for a $1.46 per watt incentive, while combined heat and power and electric fuel cells can earn a $1.65 per watt incentive. PG&E solar incentives include a one-time expected performance payment of $0.20 per watt and performance-based incentives of $0.025/kWh.
- Energize Delaware’s Solar Renewable Energy Credit program offers an upfront payment of $.45/watt ($450/kW) in exchange for the first 20 years of solar renewable energy credits. The state also offers a Solar Thermal and Geothermal Commercial and Industrial Incentive Program, designed to incentivize the construction of non-residential solar-thermal and geothermal heating systems. The program provides rebates up to $200,000 and are designed to cover approximately 30 percent of the total cost of the project.
- The Illinois Renewable Energy Resources Program was awarding wind and solar rebates up to $10,000 for homeowners, $20,000 for businesses, and $30,000 for public sector and non-profit entities. Incentives for solar PV and wind energy were up to 25 percent of project costs for homeowners and business entities, and 40 percent for public sector and non-profit entities. Solar thermal incentives were up to 30 percent of project costs for homeowners and businesses, and 40 percent for the public sector and non-profit entities.
- Montana’s NorthWestern Energy offers incentives of $0.50 per watt for solar PV ($25,000 maximum per customer), and $2 per watt for wind systems ($10,000 maximum per customer). The Montana Department of Environmental Quality also offers the Alternative Energy Revolving Loan Program, which makes loans of up to $40,000 (subject to available funds), at a 2015 interest rate of 3.25 percent, for installation of alternative energy systems that generate energy for the borrower’s use.
- In South Carolina, Duke Energy’s current rebate value for qualified installation of solar PV is $1 per watt. The program is reported to cover up to a third of total qualified solar PV technology installation costs.
The climate benefits of DER generation aside, organizations haven’t seen this much disruptive opportunity to rein in control of their energy spend since the deregulation of utilities. Similar to that event, DERs will create an opportunity for third party companies to insert themselves between customers and utilities, which will “disrupt” the utility model. That could be beneficial to energy consumers over the long haul, but in the shorter term DERs will force disruption on energy consumers themselves. That disruption includes a whole new set of energy procurement, cost, and contract considerations and a wholesale change in long-term energy strategies, especially as it relates to current definitions of peak and off-peak demand.
For more information on the DERs in play among U.S. businesses—and for comprehensive insight into the energy and sustainability measures being implemented by more than 700 energy, sustainability, facility and finance professionals—download our 2016 Energy and Sustainability Predictions report.