Businesses are increasingly turning to renewable energy, especially solar, to combat rising electricity costs and reduce their carbon footprint.
However, relying too heavily on a single renewable source like solar can lead to increased total energy costs due to variability challenges.
Discovery Green, a renewable energy platform for businesses, emphasizes the importance of diversification in both energy generation and consumption to overcome these challenges.
Balancing Renewable Energy and Consumption Patterns
While solar energy offers immediate financial benefits, businesses often face a significant premium when trying to fulfill their remaining energy needs with other renewable sources after reaching a 45% solar coverage.
André Nepgen, head of Discovery Green, highlights the importance of optimizing the mix of renewable energy and aligning it with a business’s consumption patterns.
The Risk of Solar-Focused Strategies
Nepgen cautions against solely focusing on solar procurement, as it can lead to long-term cost increases of over 50%.
He emphasizes the need to recognize and address the variability in both renewable energy generation and business electricity consumption.
Discovery Green’s analysis reveals significant fluctuations in solar and wind energy output, which can impact financial savings.
Diversification as the Solution
Discovery Green proposes diversification as the key to mitigating these risks. By pooling renewable energy from various sources, businesses can create a diversified portfolio that is more resilient to fluctuations in generation.
This approach ensures a stable and reliable energy supply while minimizing the risk of wasted energy.
Creating a Diversified Business Portfolio
Additionally, a diversified business portfolio can further enhance the benefits of renewable energy. By combining different consumption profiles, businesses can achieve a higher percentage of renewable coverage with minimal risk of wasted generation.
Discovery Green’s analysis demonstrates that a portfolio of five businesses from different industries can achieve a significantly higher renewable energy coverage level compared to a single business.
The Financial and Risk Benefits of Diversification
Diversification offers businesses the opportunity to replace at least 90% of their energy consumption with renewables in a single transaction, eliminating the risks associated with low coverage, solar-focused strategies.
This approach not only maximizes financial savings but also provides businesses with a stable and sustainable energy solution.
By embracing diversification in both energy generation and consumption, businesses can unlock the full potential of renewable energy while mitigating risks and ensuring long-term cost savings.