HitYour2020RenewableEnergyTargetsandMaximizethe30%FederalTaxCredit
In2020,renewableportfoliostandard(“RPS”)requirementsmustbemetinCalifornia(33%)and
Colorado(30%),amongselectotherstates(30stateshavesubstantiveRPSprograms).Likewise,many
companieshavetheirown2020renewableenergygoals,butalargenumberofenterprisesarenot
movingquicklyenoughtomeetthesegoalsinthemostprofitableandefficientmanner.Inaddition,the
FederalInvestmentTaxCredit(“ITC”)willstepdownfrom30%todayto10%in2022.Withcostcompetitivetechnologies,amaturemarketofvendorsandsupportivegovernmentpolicies,whatisthe
holdup?
Arecent2016PriceWaterhouseCoopersstudyshedssomelightontheobstacles,whichinclude:
- Identifyingthebestreturnoninvestment
- Gainingsufficientinternalsupportacrossfunctionalareas
- Findingappropriatecontractualandfinancialstructures
- Evaluatingabroadrangeofchoicesthroughoneconsistentapproachandpartner
- Findingawaytohandlethefluctuatingpoliciesandprices
- Scalingup
Companiescanovercomethesebarriersanddemonstrateleadershipamongtheirpeersbygetting
focusednowandexecutinginadisciplinedmanner.Giventhescaleofcertaincompanies’operations,
fouryearsisnotalotoftimetoplan,executeandfullytakeadvantageofthe30%ITC.
EHSandsustainabilitymanagerscantaketheleadinmeeting2020goalsbydevelopingadisciplined,
adaptable4-yearstrategicplanaccompaniedbyanobjectivebusinesscase.Belowareguidingstepsto
success:
1) Defineyourcorporatemandateandgoals
Developaclearcorporatemandateandspecifictime-basedgoals.Formostenterprises,thegoalsarea
mixofenergyneeds,financialcriteria,sustainabilitytargetsandmarketingconsiderations.
2) Determinecriteriaforaviableproject
Evaluatingsitesforrenewableenergypotentialrequiresknowingwhatthemetricsarefora“go/nogo/wait”decision.Whatarethefinancialcriteriathatmattermost?Whatarethenon-financialcriteria?
3) Analyzeyourportfoliotoidentifythebestprojects
Acomprehensive,objectiverenewableenergyanalyticsmodelshouldtakealldataandtransformitinto
afewcrucial,meaningfulmeasuresofaproject’sviability:internalrateofreturn,payback,electrical
offsetpercentage,netpresentvalueandothermetricsthatmaybepartofacompany’sdecision-making
criteria.
4) Understandthechoicesinvolvedinrenewableenergyprojects
Presentrenewableenergyoptionseffectivelytodecision-makers.Foreachpotentialproject,several
majordecisionsrelatedtoimplementationsuchasownershipstructure,utilityrulesandrates,
governmentorutilityincentives,technologychoice,vendortype,andoptimaltimingneedtobe
considered.
5) Createyour4-year2020plan
Astrategicplanandthedisciplineandexpertisetostayoncourseforyourrenewableenergygoalsis
critical.Thecoreapproachistomethodicallyassess,qualify,formulateandexecuterenewableenergy
andsustainabilitysolutions.
6) Makingthebusinesscase
Addresstheneedsandlanguageofeachteammemberbeforearticulatingthecorporatemandateand
goals.Providesufficientdetailaboutyourapproachandmodel,ensuringthattheanalyticsare
comprehensiveandobjective.
Creatinga4-yearrenewableenergyplanwithaholistic,objectivemodelcanempowerEHSmanagersto
movequicklyonthebestopportunitiesandmeettheirgoals.Withthisapproach,acompanycan
harvestthemostattractiverenewableenergyprojectsanddemonstrateleadership,whilehavingthe
leastdistractionstotheircorebusiness.
SamLee,CEO
AltaEnergy,Inc.(www.altaenergyinc.com)
Readersinterestedinreceivingthewhitepaperversionofthisarticle,withfull
detailsonhowtocreatea4-yearrenewableenergyplan,pleasecontactRyan
[email protected].