Is Renewable Energy a Profitable Business?
Are you looking to invest in an energy company? Or are you acquiring information on how to become an energy efficiency consultant? Then this article is for you!
The world needs energy, which is commonly used to supply electricity for homes and businesses. Some of the world’s most utilized energy sources include oil, coal, and gas. However, these sources are nonrenewable, and we only have limited access to them.
Fossil fuels, like coal and petroleum, are a good example. They were produced thousands of years ago from the buried remains of ancient sea plants and animals that existed millions of years back. For example, nuclear energy was developed using uranium, which was discovered billions of years ago when stars formed. Uranium can be found throughout the earth’s crust but can be difficult and expensive to mine and convert into fuel for nuclear power plants.
These nonrenewable energy sources inevitably harm our environment. Thankfully, there is a safer alternative, and that is renewable energy. This kind of energy comes from the earth’s natural conditions and includes solar, wind, biomass, hydrogen, geothermal, and ocean power. Likewise, these sources are constantly replenished and can’t run out.
Indeed, the renewable energy market is something worth investing in, because not only does it offer a good return on assets but can also make positive changes to our environment.
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How much is the renewable energy market worth?
If you’re planning to start an energy company, it’s worth taking a look at its market, so you can make informed decisions about your services and business expectations.
Market Research Future®’s projection is that the global renewable energy market may reach an 8.53% compound annual growth rate (CAGR) until 2027. By the end of 2027, the estimated valuation of the market will be at $2,900 billion. This anticipated growth of the renewable energy market is projected for several reasons.
One of the contributing factors for the growth of the renewable energy market is the limited supply of fossil fuels remaining and its volatile prices. Another cause is that the government now implements regulations regarding climate change, thus, putting more interest and funding in the renewable energy market. Likewise, the continuous advancement in technology offers profitable opportunities.
The renewable energy market in the Asia-Pacific is expected to have the fastest growth rate. This is because developing countries are foreseen to have an increased demand for energy consumption due to the rise of industrialization. Factors such as rapid industrialization, population growth, as well as favorable policies concerning renewable energy in these countries are considered major factors as to why the market is projected to expand.
Major industry participants include General Electric (GE), Xcel Energy Inc. (Xcel Energy), and ABB Ltd. In fact, all key players in the renewable energy sector are applying their best efforts to just stay ahead of the competition. One such example is of Innergex acquiring Alterra. The acquisition added 485 MW of renewable energy assets to the existing 5,000 MW Innergex projects. Meanwhile, Enel Green Power‘s recent strategy was to invest $290 million in a wind farm construction of the “Dolores” project. This effort is expected to produce up to 938 GWh of electricity annually.
Distributed energy resources (DER) are renewable energy units that can be seen on the rooftop of residential or commercial properties. They can also be called “behind the meter,” because electricity can come from behind the property’s electricity meter. DER are fairly common, and you may know them as home energy management technologies, rooftop solar PV units, or as thermal energy storage.
The projection of Wood Mackenzie Power & Renewables is that the combined DER capacity might reach 387 gigawatts with a $110.3 billion cumulative investment between 2020 and 2025. However, due to the Covid-19 pandemic, there might be delays in implementing solar and storage projects and reaching these numbers. Therefore, an economic downturn in DER investments can be expected in 2020 and 2021. However, there’s a high chance for the market to bounce back starting 2023.
Advantages of starting a renewable energy business
Many opportunities await small and big entrepreneurs in the renewable energy sector. Before knowing how to start a renewable energy company, it’s worth taking note of these advantages:
You’ll Never Run Out of Resources
As discussed, nonrenewable energy sources are finite and supply is already becoming limited. Although it’s plausible that experts are tapping technology to maximize resource reserves, the possibility of these resources running out is still there. As we all know, renewable energy comes from natural sources that are constantly replenished by earth’s atmosphere. In turn, you’ll never have to worry about where to get the energy your customers will need.
Green Solution
Nonrenewable energy sources damage our environment. They can pollute air and water, which can result in a public health catastrophe, as well as loss of wildlife and habitat. Greenhouse gas emissions, due to the burning of fuel, are suspected to cause climate change. Consumers nowadays are aware of the environmental impacts of nonrenewable energy, making them turn to cleaner energy alternatives. This particular consumer interest is something entrepreneurs can take advantage of.
Plenty of Opportunities
Because there are different kinds of renewable energy sources, this enables entrepreneurs to specialize and be competitive in one area. You can learn to set up wind farms or perhaps learn how to become an energy efficient consultant. Along these lines, check out some of the forecasted renewable energy technology trends you can venture on:
Energy Storage
While renewable energy sources are something that cannot run out, the problem is that weather conditions change from time to time. That is why energy storage technology was developed. The goal here is to accumulate energy when supply exceeds demand and release the said energy when the reverse situation happens.
Microgrids
A microgrid is a local energy grid that can operate independently even if disconnected from the traditional grid. It is a self-sufficient energy system that can connect to homes, businesses, or other buildings. In times of storms, power outages, and other emergencies, it can still operate on its own through local energy generation. A microgrid can be powered by batteries, generators, solar panels, and different renewable resources.
Blockchain and IoT
Blockchain technology is originally developed for cryptocurrency transactions but is now being applied in the energy market. This technology allows “peer-to-peer” transactions. Every participant in a network can transact with one another without the need for a third-party intermediator. When paired with the use of interrelated computing devices or the Internet of things (IoT), people can now easily buy and sell energy. The Brooklyn Microgrid project is a good example of this innovation.
Grid Parity
This is defined as the point wherein an energy alternative’s levelized cost of electricity is equal or lower than the conventional energy forms. A report from GTM Research states that 42 U.S. states are expected to reach solar grid parity by 2020. This increases our chance of enjoying lower energy costs compared to traditional electricity sources.
Funding
Did you know that you can rely on the government to fund your energy company or projects? Government agencies, like the U.S. Department of Energy, offer funding opportunities for renewable energy businesses. The National Renewable Energy Laboratory (NREL) also gives financing to renewable energy projects.
Careers in the renewable energy sector
Engineer
Engineers use technical skills to solve problems and develop various innovations in various industries. In the field of renewable energy, engineers handle mechanical, electrical, and environmental work. They design solar cells, hydroelectric dams, wind turbines, as well as produce new technology relevant to the industry.
Farmer
Traditionally, farmers are known to produce crops for human consumption, such as fruits and vegetables. But with today’s advancements, farmers are being tapped for bioenergy. This is a form of renewable energy sourced out from natural sources. This may include wood, sugarcane, manure, or other by-products of agricultural processes. Farmers can earn additional income by converting their farm waste into bioenergy production.
Renewable Energy Consultant
As a consultant in the renewable energy industry, you need to help clients investigate, analyze, and oversee renewable energy system installations. Inevitably, you help them reduce costs that will contribute to a high level of efficiency in their project. But this role is not limited to helping clients.
You can also guide consumers in choosing which renewable energy system will work best for their needs. Agencies like Beach Cities Solar Consulting offer consultation services for business owners in the industry. If you’re wondering how to become an energy efficiency consultant, you’ll first have to get a degree and certification in alternative energy management.
Project Manager
No matter what type of renewable energy project it is, there will always be a demand for a manager. They are the individuals responsible for planning, coordinating, organizing the budget, and supervising the entire project, from development to completion. People in this position should have leadership skills and knowledge about how to make projects more green-efficient.
Renewable Energy Sales Representative
Every kind of business needs marketing professionals to promote their products and/or services. Therefore, the sales representatives are also needed in the renewable energy industry. Aside from goods promotion, they are responsible for identifying prospects, assessing customer needs, preparing proposals, making presentations, providing technical details, and handling orders. These professionals are also expected to report to their management team and present marketing plans. If you have a marketing degree and a particular interest in renewable energy, then this might just be the career for you.
Final thoughts
The renewable energy market is continuously growing. Nonrenewable energy has been impacting the environment adversely for generations and this raises a concern for many. In order to reverse the damage and highlight better alternatives, many private and government agencies are now developing diverse renewable energy technologies.
Studies have also shown that the global renewable energy market is expected to earn billions in valuation. Whether you’re thinking of how to become an energy efficiency consultant or starting up your own energy company, this is the perfect time to invest in the renewable energy industry.
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