Energy Pricing and Renewable Generation: How Your Business Can Prepare

Jonathan Lee

As we enter the end of 2016, a unique combination of national trends and natural phenomenon mean one thing: your business’s energy budget could increase drastically. Ecova’s Q3 Energy Outlook webinar explored how rising energy prices and colder-than-normal temperatures from La Niña could impact your energy strategy—as well as how long-term planning that leverages renewables and attributes could prepare you to address these factors proactively.

Ecova’s webinar drew on extensive market data and expert analysis to provide insight into general market conditions and what increasing energy prices mean for the rest of 2016. Warm conditions are projected to engulf large portions of the nation this fall, which could prolong increased power sector demand. Natural gas pricing—identified as the largest source of electric generation in the U.S.—is expected to rise through the end of 2016, averaging $2.41/MMBtu through 2016 and $2.95/MMBtu in 2017. And of course, the La Niña weather phenomenon, which typically brings colder-than-normal winters to the Midwest and Northeast, continues to be on everyone’s mind. The National Oceanic and Atmospheric Administration estimates a 55-60% chance of La Niña before the end of the year.

Leveraging renewables and attributes within emission reduction strategies offers businesses the promise of offsetting these rapid fluctuations in energy pricing, but it’s important to recognize both the opportunities and the risk associated with this investment. Interest in renewables continues to grow—renewable and nuclear energy sources in the U.S. are expected to comprise 41% of all generation by 2025. Renewable procurement strategies can include unbundled Renewable Energy Certifications (RECs), emission offsets, emerging community/shared solar generation and Virtual Power Purchase Agreements (VPPAs).

To leverage these options effectively, however, organizations should fully assess the risk associated with making a shift to renewables. From regulatory and rate structure changes to the difficulty of managing procurement contracts to maintenance costs, investing in renewables remains a complex undertaking. Following these steps can help you address risk proactively and successfully integrate renewable sources into your strategy:

  • Clearly define renewable objectives and constraints
  • Analyze energy performance, supply mix and market dynamics
  • Develop/refine your business’s renewable procurement strategy
  • Finalize opportunity targets, procure assets and monitor results

We hope you enjoyed the webinar and found it informative. To receive personal invites to sustainability webinars, please subscribe here. We look forward to seeing you at future webinars!

Co-authored by Jonathan Lee and Clayt Tabor.

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The information in this page is offered only for general informational and educational purposes. It is not offered as and does not constitute legal advice.

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