Large enterprises — such as Amazon and Walmart — are frequently in the news because of their increased commitments to renewable energy sources. These behemoths are using their deep pockets to employ wind, solar and other strategies to achieve their goals. But what about smaller businesses? Can a business like yours get on the renewable energy train without breaking the bank? In short, yes!
Why you should invest in renewables
There are a number of great reasons why your business should invest in renewable energy. Cost savings are by far the biggest benefit. Energy costs are one of the largest line items for many businesses, but when you're generating some of your own energy, your utility bills go down and become more predictable. That helps you better manage your cash flow.
Businesses looking to reduce their carbon footprint are also reaping the benefits in unexpected ways. As more people are choosing to shop with and work for companies that care about the planet, an organization's environmental efforts are often in the spotlight. Many small businesses have found that marketing their investment in renewables has expanded their customer base and helped to retain and attract loyal employees.
Renewable energy credits
Purchasing renewable energy credits (RECs) is one option for getting into the renewable energy mix. The electricity that powers your business comes from a variety of sources — likely a mix of nuclear natural gas, and renewables. RECs are certificates that, when purchased in addition to your electricity, guarantee that a certain amount of the renewable energy being generated is being done so on your behalf.
But RECs won't reduce your energy costs. Installing an onsite renewable energy system, however, will. Because of the return on investment, this may be the most cost-effective option for your business.
Onsite renewable energy options
There are two primary types of on-site renewable energy that your business should consider. Geothermal heat pumps are one option. Buried in the ground near your building, a geothermal heat pump uses the Earth's stable temperature to heat or cool your building. Geothermal systems can be costly, but the investment can be quickly recovered through lower energy bills.
Onsite solar is probably the most common source of renewable energy for small businesses. Arrays can be mounted on the roof, on a carport or on an underutilized plot of land. The cost of the solar array will depend on the amount of energy needed, and thus the size of the system.
The Federal Investment Tax Credit (ITC) can help reduce costs. The credit covers up to 30% of project costs. Plus, many states are also offering tax incentives, which make ownership even more affordable.
For those who don't want to make an upfront investment, a power purchase agreement (PPA) is a great option. In a PPA, a developer installs and maintains a solar system on your property. The developer pays for the system and sells you electricity at a fixed, reduced cost for the next 10 to 25 years.
There are a number of ways for small businesses to invest in renewable energy without breaking the bank. Which path is right for your company?
