The next phase of the energy transition hinges on corporate leadership
By Enel North America
The Inflation Reduction Act provides unprecedented levels of support for clean energy technologies, injecting nearly $400 billion into the clean energy economy. U.S. industries with their sights set on energy security, resiliency and sustainability are initiating plans to best take advantage of the legislation’s opportunities. With significant financial incentives on the table and a decade of policy certainty, now is the time for businesses and institutions to take the lead in the energy transition.
Analysts project that collective action to accelerate low-emissions growth would generate $3 trillion for the U.S. economy over the next 50 years, while insufficient action could cost $14.5 trillion in the same period. 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.
The decarbonization journey is complex. But the products and technologies that exist in the market, and those in development, allow companies to take a comprehensive approach to their sustainable growth plans. With the right energy partner, companies of all sizes can develop a diversified, balanced energy portfolio that meets their goals.
Electrify operations for cleaner, cheaper power
Bolstered by 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 project that, due to the Inflation Reduction Act, retail electricity costs will decline by 5 percent to 7 percent 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 can reduce their risk of price fluctuation, lower costs and advance sustainability goals. There are various options for doing so — renewable retail energy, power purchase agreements and virtual power purchase agreements, as well as distributed energy resources like microgrids, storage and demand response. Solutions will look different for different businesses, but the most critical factor is simply getting started.
Begin with low-effort, high-impact solutions that are flexible, renewable and resilient. 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 electricity
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 the turbulence of energy markets, 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 overly 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 act’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.
More and more, corporate PPA customers are also supporting their environmental, social and governance strategies by collaborating with clean energy partners on local community investments and initiatives.
For those companies in hard-to-abate sectors, there are more domestic clean power options on the horizon. The Inflation Reduction Act is expected to accelerate the scale and affordability of hydrogen produced by clean energy to unlock decarbonization for industrial players.
Tap into EV incentives for fleet electrification
Between Inflation Reduction Act incentives and the $2.5 billion in new federal grants toward electric vehicle charging stations, electric transportation is on the fast track.
Consultants estimate that electric fleet vehicles could cost businesses 15 percent to 25 percent 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.
There is already a clear shift toward organizations becoming “prosumers” — producers and consumers — that play an active role in acquiring, using and generating their energy. The Inflation Reduction Act’s expanded tax credits mean businesses won’t need to wait for their regional electric grid to become cleaner or more reliable; 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.
Achieve operational, economic and regulatory resilience
Electrifying operations and adopting flexible energy resources improves a company’s operational, economic and regulatory energy resilience. Last year alone, weather and climate disasters cost the U.S. $170 billion, which challenged business continuity and damaged infrastructure. By investing in solutions that maximize efficiency, stability and long-term savings, businesses are better prepared to stay online during grid disruptions, keep energy costs consistent, and continue to meet sustainability regulations.
In addition to improving resilience, investment in clean energy solutions delivers the economic value needed to scale a company’s decarbonization journey, while also positioning its business to be more attractive to investors who are increasingly weighing the impacts of climate change on a business’s overall financial performance.
Creating a competitive advantage in the energy transition
It’s time for businesses to take charge of their role in the energy transition — one that promises to transform rural economies, support the domestic labor force and supply chains, and build a stronger, more resilient U.S. industrial sector.
Policy alone will not be the force of change. As the new energy sector takes shape, business leaders have an unprecedented opportunity to accelerate toward net zero with the wide array of clean energy solutions at their disposal.
Learn more about partnering with Enel North America to simplify the path to net zero.
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