In the rapidly expanding renewable energy market in North America, businesses need to understand industry trends to ensure they can capture the maximum value from the energy transition. Renewable energy projects have a wide range of ESG profiles.
FREMONT, CA: North America's renewable energy sector is undergoing rapid growth, and it is estimated that for the past decade, the amount of electricity driven by solar and wind has almost quadrupled in the U.S. Decarbonization has played a role in its growth, with 70 percent of utilities committing to 100 percent clean energy goals, changing customer goals, rapid technological advances, and changes in pricing and contract structures.
Businesses across industries are expected to continue prioritizing decarbonization goals and transitioning to clean energy regardless of whether the current administration's legislative agenda encourages low- and zero-carbon sources.
Let us have a look at the emerging trends shaping the renewable energy sector.
Scientists and companies are setting net-zero targets
As businesses reduce their emissions using Science-Based Targets (SBTi), they are at a record pace. Science-based targets have more than tripled since 2021, according to SBTi, and now a record 2,940 have committed to setting them in response to shareholder pressure.
Organizations committed to 100 percent renewable energy and net-zero carbon emissions are becoming more ambitious and eager to lead their industries.
Organizations are looking for Scope 3 targets and tools
Managing emissions across the entire value chain is key to making meaningful reductions. Decarbonization goals can be achieved by considering the whole value chain and managing concrete targets. Businesses are also changing procurement standards to encourage decarbonization.
Suppliers benefit from companies sharing their procurement experience, providing financial support, and partnering with them on renewable energy aggregations. A powerful aggregation tool enables smaller companies with lower electricity loads to collaborate and buy renewables.
Cost increases and supply chain challenges persist
The COVID-19 pandemic has caused commodities, shipping, and labor prices to soar. A massive growth in clean electricity has also raised concerns about grid constraints.
The grid connection for hundreds of clean energy projects could take several years. With more renewable power plants coming online nationwide, grid upgrades and state interconnection rules are becoming increasingly necessary.
Increasing focus on environmental and social benefits of clean power
Corporations are increasingly aware that renewable energy projects can have positive non-financial impacts. Environmental and social criteria are now being considered when evaluating renewable energy projects.
Renewable energy is transforming rural communities across North America. Small businesses and organizations that support local economic development are increasingly embracing solar and wind power. A wide range of issues will be addressed through renewable projects. These include land use and wildlife protection, material management and circularity, grid modernization and resilience, air and water quality, economic development, and a just transition.
Energy partner with flexible contract structures and new solutions
A growing interest is in customizing contract structures to manage energy market volatility in the renewable energy markets. Project developers are becoming increasingly popular among organizations investing in renewable energy.
Market risk must be identified upfront. Customized structures must be created to mitigate risk over the contract term. Some renewable energy companies may need more internal capacity to offer their customers the type of risk management they require. However, others may offer solutions tailored to each customer's needs through an internal trading desk and financial backing.
The clean, affordable, reliable energy source of choice will be electricity as we decarbonize our power sector. U.S. renewable energy will control 30 percent of the energy market by 2026. Identifying smart energy opportunities and embracing customized decarbonization plans will help companies stay ahead of the trend and maximize value.
The fastest way to decarbonize the world is through renewable energy. The cost of building them will decrease, allowing businesses to reduce exposure to volatile energy market prices.