With holistic approach, businesses can lead in the energy transition
By Enel North America
The passage of the Inflation Reduction Act promises to inject $369 billion into the clean energy economy, transform the energy landscape and accelerate new and upgraded critical infrastructure to provide energy security and resiliency for U.S. industries. With significant financial incentives on the table and a decade of policy certainty, businesses have a responsibility to lead the energy transition. By scaling their decarbonization efforts and integrating a suite of solutions, companies can create lasting impact and put policy into action.
The decarbonization journey is complex. But the products and technologies that exist in the market, and those in development, allow companies to take a holistic approach to their sustainable growth plans. With the right partners, companies of all sizes can take simple and smart steps to decarbonize their supply chain and operations.
Now is the time for businesses and institutions to capitalize on the opportunities made available by the new climate policy. As the U.S. transforms its energy economy, companies need to start thinking more holistically about their sustainability and clean energy strategy, adopting complementary and integrated solutions like renewable electricity, flexible energy resources and electric transportation, to achieve their decarbonization goals in a more efficient and impactful way.
Electrify operations for cleaner, cheaper power
Bolstered by the passage of the Inflation Reduction Act, the U.S. power sector is set to rapidly decarbonize, making electricity a clean, affordable, and reliable energy source. As the energy transition accelerates and clean energy solutions scale, companies have an opportunity to reimagine traditional business models to create new, cost-effective and reliable commercial applications from carbon-free electricity. Researchers at Resources for the Future project that retail electricity costs will decline by 5%-7% over the next decade. Renewables are faster to market, cheaper to build and cut dependence on globally traded commodities. This means the price of renewable electricity and electric equipment will continue to drop — creating opportunities for cost-savings and operational resiliency.
Businesses that electrify and move away from more volatile energy markets will gain three major benefits: reduced risk of price fluctuation, lower costs and clean, efficient power.
When moving through their electrification journey, companies should begin with low-effort, high-impact solutions that are flexible, renewable and resilient. Those solutions will look different for different businesses, but the most critical factor is simply getting started. Whether that is scaling up from existing battery storage, incrementally growing an electric fleet or even installing LED light bulbs – businesses must start wherever they are now.
Reduce business risks and lower costs with domestically generated power
The Inflation Reduction Act incentivizes domestically generated clean power, mitigating energy market volatility and giving energy consumers more price stability. Conflict in Europe has underscored how turbulent energy markets are, which face what is often called “the energy trilemma,” the conflicting challenge of security, accessibility and sustainability. Energy security inevitably means not relying too much on any one single energy solution and not being dependent on energy sourced from other countries. Companies that invest in domestically generated clean power, decarbonize operations and adopt a suite of solutions to balance energy supply and demand benefit from greater energy security and stability.
The bill’s system of tax credits and grants for the energy sector further accelerates renewable buildout in the U.S., making the investment in clean electricity more affordable for businesses previously priced out of the market.
Corporate Power Purchase Agreements are becoming increasingly common, and businesses don’t need to be energy experts to capitalize on them. Today’s PPAs market offers flexible and customizable contracts in addition to commodity risk management solutions. These can help businesses reduce emissions along their supply chain, shield against global commodities markets and accelerate decarbonization.
Tap into EV incentives for fleet electrification
It is estimated that electric fleet vehicles could cost businesses 15%-25% less than that of equivalent internal combustion engine vehicles by 2030 due to falling costs, widening availability and direct policy action. While EVs often require a higher upfront investment, regular fuel and maintenance costs are typically lower than their gasoline or diesel counterparts. Companies and institutions adding multiple EV chargers may be eligible for tax credits for each charger installed, significantly lowering the cost of electrifying a fleet.
By developing a well-rounded approach to fleet electrification, companies can reduce their carbon emissions and optimize their fleet to meet their needs today and in the future. As technology advances, businesses should look for vehicle-grid integration opportunities, turning EVs’ electricity demand into flexible load and energy storage solutions. This opens the door for additional benefits, including intermittent renewable energy, grid services and backup power.
Become an energy producer and consumer
As the electric grid transforms from an outdated, unreliable and wasteful system to a modernized, interconnected system, renewable sources will be supplemented by numerous decentralized consumer sources. To ensure operational resiliency, companies can leverage distributed systems that generate, store and resell power. With the passage of the Inflation Reduction Act, newly expanded tax credits mean businesses won’t need to wait for their regional electric grid to become cleaner; they can invest in their own on-site sustainable energy production and become more self-sufficient.
Small-scale distributed energy resources like standalone batteries, solar panels paired with battery storage and microgrids, power operations with cleaner, cheaper electricity and, in many markets, generate revenue when surplus electricity is sold back to the grid. This dynamic shift — businesses transitioning from passive users to key market players — allows companies to strategically leverage technology to manage concrete targets and reach decarbonization goals.
Reduce operational risk and improve climate resiliency
Taking steps to decarbonize and electrify operations and adopting flexible energy resources reduces operational risk and improves climate resiliency. By investing in solutions that maximize efficiency, stability and long-term savings, businesses are better prepared to tackle outside threats like extreme weather, while keeping operations running smoothly. In addition to improving climate resiliency, investment in clean energy solutions delivers the economic value needed to scale a company’s decarbonization journey, while also positioning their business to be more attractive to investors who are increasingly weighing the impacts of climate change on a business’s overall financial performance.
The global climate crisis is the most pressing challenge of our lifetimes. As the U.S. enters a decade of aggressive climate policy, it’s time for businesses to help build a clean, electrified economy and reach net zero. This is a once-in-a-generation opportunity for businesses to play an active role in the energy transition, an energy transition that promises to transform rural economies, support the domestic labor force and supply chains, and build a stronger, more resilient U.S. industry sector. However, policy alone will not be the force of change. As the new energy sector takes shape, business leaders have a responsibility to leverage the opportunity at hand and take action to accelerate the energy transition with the full toolbox of clean energy solutions at their disposal.
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