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How To Write a Renewable Energy Business Plan (Template, Sample)

Published Nov.07, 2022

Updated Apr.23, 2024

By: Jakub Babkins

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Table of Content

Renewable energy business plan for starting your own business

Do you aspire to keep both your bank account and the environment happy? A renewable business may be the best choice for you, then. By launching it, you can generate profits while doing your bit for the planet.

A renewable energy enterprise supplies green and clean energy produced by solar, wind, or water resources. The business has immense potential especially due to the launch of B3W in near future.

To commence this business, you require a business plan for renewable energy that covers every aspect. For an insight into how to start an alternative energy company and how to document a perfect operational plan, you can read this article. In this blog, we have given a sample business plan for Clean Power, a startup based in Phoenix. Before entering the business world, it will be helpful to also read a business plan for investors.

Executive Summary

2.1 the business.

Clean Power is a renewable energy startup based in Phoenix. The company aims at offering clean and green energy solutions to households, institutes, companies, and manufacturing plants.

2.2 Management of renewable energy business

After you have developed an operational plan for starting a renewable energy business, you need to devise a strategy to manage it. Your management strategy should include planning about where to procure the equipment from, where to launch your plant, and how to manage the transitions from raw product to successful installation while remaining within your finances.

In this business plan for renewable energy projects we are documenting how to start a renewable company. We will include segments from business plan for banks to help you with the financial part.

Moreover, in this renewable energy business plan pdf, we’ll also jot down the staff and other requirements to run the company.

2.3 Customers of the renewable energy business

Customer groups may be diverse, based on your preferences. Those of Clean Power are:

• Industrial Complex
• Manufacturing Hubs

2.4 Business Target

The business targets of Clean Power are centered around environmental protection and customer satisfaction. They will be mentioned in the later sections. However, monetary goals are partially demonstrated here:

Company Summary

3.1 company owner.

Clean Power will be owned by Martha Ben. Martha is an Electrical Engineer. She has specialized in Energy Systems Engineering at the prestigious Massachusetts Institute in Amherst.

3.2 Why the renewable energy business is being started

Martha always wished to start a business in the engineering niche. Due to immense renewable energy business opportunities, she decided to go for it.

3.3 How the renewable energy business will be started

If you are worried about how to start a career in renewable energy, just follow these simple steps.

Step1: Create Business Plan for Renewable Energy Company

To initiate the launch, you need to make business plan renewable energy. For reference, you may use this renewable energy business plan template or solar energy business plan .

Step2: Acquire Resources

Subsequently, you are required to procure all the equipment that may be needed to generate renewable energy. You will need to hire the personnel and staff that can help you operate.

Step3: Make you Known

The next step is to advertise your venture and competitive advantage. You should be clear and concise about how you are different and better than your competitors. A good practice these days is to exploit online media, Google Ads, and websites to make you known to the public.

Step4: Manage Finances

As you are finished with devising a business plan, you need to start operating and managing the financial flows.

Services of renewable energy business

Services for startup renewable energy business must be decided as you explore how to get into renewable energy industry. Due to diverse business opportunities in renewable energy, you are fortunate to provide services in any niche. To decide on the services, you should study several renewable energy business plans and explore renewable energy business ideas from online companies.

Whatever services you decide for renewable energy for business, make sure to include all its aspects in your business plan template for renewable energy.

The services of Clean Power are:

• Manufacturing & Setting Up Solar Cells

Our basic service will be to manufacture solar panels, solar tiles, and solar cells to be installed in small and large spaces.

• Generating Hydra Power

We will develop optimized solutions to generate clean energy by exploiting water resources.

• Wind-Powered Projects

We will also establish and install wind power plants in the city outskirts.

• Installing Power Protection Systems

We will also set up power protection systems with relaying networks wherever we install the renewable energy setup.

Marketing Analysis of renewable energy business

There are many factors to be considered before establishing a business in renewable energy. First, you need to explore how to start a renewable energy business in a specific location. You need to check out for average income of people in your vicinity to know whether they would avail of renewable energy solutions or not.

All of this information can be summarized in the marketing analysis segment of your renewable energy business plan. You can further make sections for customer segments, market trends, and prevalent pricing strategies to have a clearer idea of renewable energy business opportunity in your area.

For developing a marketing analysis that considers all business opportunities renewable energy, an expert person who knows how to gather statistical data for secondary analysis is required. You may consider hiring a professional or if you want to do the task yourself, you should thoroughly study a renewable energy business plan sample. A good practice would be to also go through biotech startup business plans to have in-depth knowledge of the field.

5.1 Market Trends

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All the graphs related to renewable energy are seeing an upward trajectory. At present, the market size is $17 billion according to IBISWorld and the figure is expected to rise in the near future. Most of the solar, hydro, and wind power projects are expected to be assigned by the U.S. government in the wake of clean energy programs sought after by B3W countries.

5.2 Marketing Segmentation

In this renewable energy company business plan the market segments identified by Clean Power are given below. Since some of the segments also do overlap with those in gas station business plan and business plan for a biodiesel , you can take guidance from them as well.

Business plan for investors

5.2.1 households.

This segment is expected to make small purchases for mainly solar panels at us.

5.2.2 Industrial Complex

This segment will be making large purchases and they are expected to avail of all of our services including the installation of protection systems.

5.2.3 Institutes

Government and non-government institutions are expected to avail of our hydro, wind, and solar energy services. They might also hire us for installing power system installation systems for generation grids.

5.2.4 Manufacturing Hubs

This segment will form most of our customers. It is because manufacturers look for ways to optimize their operations even when the initial setup costs are high. They are also expected to avail of our power system protection services.

5.3 Business Target

• Maintaining a CSAT score above 90% throughout the service years.
• Capturing 25% of the market share within three years of operation.

5.4 Product Pricing

As per this solar farm business plan , Clean Power will keep its prices in the same range as the market average. However, certain discounts will be provided at the start to attract customers.

Marketing Strategy of renewable energy business

Though there are immense business opportunities in renewable energy, they can yield you profits only when you reach out to a maximum of customers.

A major challenge in renewable energy entrepreneurship is to convince people how renewable energy is ultimately going to save them money as the initial installation costs are high. Therefore, while you learn how to get into the renewable energy industry, you should also explore how to market renewable energy for businesses’ success.

In this blog on how to make a renewable energy project, we are providing the sales strategy developed by Clean Power.

6.1 Competitive Analysis

• Our employees are highly specialized and experts in their domains.
• We are offering several discounts, in the beginning, to get known.
• Customers are our topmost priority, we are willing to go to all lengths to facilitate them.

6.2 Sales Strategy

• We’ll offer a 50% discount to our first 50 customers.
• We’ll offer a 20% discount on all our services in the months of June and July.
• We’ll advertise our startup on social media, in local newspapers, and in magazines.
• We’ll hold seminars to elucidate the importance of climate conservation by turning to renewable energy.

6.3 Sales Monthly

6.4 Sales Yearly

6.5 Sales Forecast

Personnel plan of renewable energy business

If you have decided to build your own renewable energy source and help others in doing the same, you should go for planning about staffing requirements. The business renewable energy cannot be run without an expert, dedicated, and talented bunch of workers. You need to devise a criterion for employment and a policy to assign weightage to candidates’ test or interview scores, educational qualifications, experience, etc. to find the ideal one.

7.1 Company Staff

In this renewable energy business plan pdf, we are providing the list of company staff developed for Clean Power.

• 1 CEO to oversee all operations
• 1 Financial Manager
• 3 Electrical Engineers
• 1 Software Engineer
• 5 Electricians & Technical Assistants
• 1 Legal Expert
• 1 Web Developer & Graphic Designer

7.2  Average Salary of Employees

Financial plan of renewable energy business.

The costs incurred in running a renewable energy business are high. At the customer end as well, getting renewable energy setup installed is an expensive venture. The renewable energy suppliers must, therefore, develop a long-term financial plan. Individual financial strategies for each project will also be needed to demonstrate to the consumer how renewable energy is going to save them their dollars in the long run.

It is recommended to hire a professional financial analyst for developing an accurate financial plan. The professional expert in the field will ask you for your fundamental policies and monetary goals and develop a plan with accurate profit margins and loss assessment tables. In case you are looking for a renewable energy business for sale you may get a pre-developed financial plan for that business.

The financial plan of Clean Power is given below.

8.1 Important Assumptions

8.2 break-even analysis.

8.3 Projected Profit and Loss

8.3.1 profit monthly.

8.3.2 Profit Yearly

8.3.3 Gross Margin Monthly

8.3.4 Gross Margin Yearly

8.4 Projected Cash Flow

8.5 Projected Balance Sheet

8.6 business ratios.

All tables in PDF

• How do I start a renewable energy business?

To offer renewable energy service, you need to make renewable energy plan. If your business plan renewable energy covers all the aspects of your business, you are only left with the task of executing it. You need to procure the machinery, rent the space, and hire some engineers, technical assistants, and managers and you are good to go!

• Which renewable energy is profitable?

If you compare renewable energy sources, you can figure out that solar is the most profitable. It is because its scale can be minimized and extended without many constraints. In this business plan for renewable energy projects we have provided the unit sales and income generated from the solar products.

• How can I start a small energy company?

You can read the complete guide on starting a small energy company in this renewable energy company business plan. The steps would be the same except that your sphere of activity will be confined to a smaller area and your manufacturing scale may be lower than others.

• What is renewable energy in business?

In business, renewable energy is offering those resources to generate power that are never prone to depletion. As elucidated in this renewable energy business plan sample, the business includes designing customized solutions according to your consumer needs on a small and large scale.

• What are the 7 types of renewable resources?

The seven types of renewable resources are:

• Hydroelectric
• Who is the largest renewable energy company?

Tesla is the largest and most renowned renewable energy company in the United States.

• Is renewable energy profitable?

Yes! In the financial part of this renewable energy company business plan, you can see how much profits can be generated as per investment by launching this business. To ensure your business never runs into loss, you just need to make an accurate renewable energy business plan template.

• How do renewable energy companies make money?

Renewable energy companies make money by offering clean, green, and sustainable energy solutions to their customers. In this renewable energy business plan pdf, we have provided all stats for Clean Power for you to gauge how much revenue can be earned through it.

• How can I invest in renewable energy?

You can launch a franchise, start your own company, as well as invest in other startups by buying their shares or stocks. In this renewable energy business plan, you can see a stepwise guide for if you want to launch your own business.

Download Renewable Energy Business Plan Sample in pdf

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Energy Conservation Business Plan

Start your own energy conservation business plan

Green Power Consultancy

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">.

Green Power Consultancy is a start-up organization in Burlington, VT that offers designs and advice to architects and consumers regarding environmentally sensitive buildings as well as energy consumption recommendations. Green Power has identified three keys to its success. The first is the need to only offer solutions which are based on market demand. The second is to ensure that all of its offerings are based on economic justifications; the solution should make sense beyond the environmental considerations because it has long-term economic value.

Green Power will be targeting architects and individual consumers. Green Power will work closely with several architects providing them the ability to offer environmental solutions to their customers. This group is growing at 7% and there are 23 potential customers in the area. The second customer group is individual consumers; an environmentally conscious group that have sought out a service provider to help them implement their personal ethics into the design of their new or existing structure.

Green Power is an environmental energy consultancy that offers a wide range of services: advice regarding passive heating, grey water usage recommendations, renewable energy considerations and employee transportation options.

Green Power will be led by the seasoned management team of Dan and Sue Lang. Dan received a degree in environmental studies, business, and a Masters in architecture. Dan has several years of work experience within the industry. The second part of the team is Sue Lang. Sue has an MBA and work experience with the Bonneville Power Administration in their renewable energy department. Through a combination of excellent education and good work experience, Green Power’s management team will be able to successfully execute on its business plan.

Green Power has conservatively forecasted sales of $202,343 for year two, rising to $238,402 for year three. Net profit will be reached in the second year. Through a combination of a proven business model, a strong management team, and this comprehensive energy business plan to guide the organization, Green Power will be long lasting, profitable business.

It is Green Power Consultancy’s mission to provide the finest green energy solutions for new constructions as well as existing building owners/lessors. Through careful analysis, attentive customer support, and cost effective solutions, Green Power will become a stable business serving the Burlington community.

Keys to Success

Green Power has identified several keys to success that will be instrumental in creating a sustainable business.  If these keys are followed, the likelihood of success will significantly increase.

• Offer solutions that are demanded by customers.
• Ensure all of the solutions have economic considerations built into the respective models.
• Only provide 100% customer satisfaction.  All customers must have their expectations exceeded.

Green Power has identified three objectives that it will pursue for the long-term success of the business:

• Proven cost-benefit analysis environmental approaches to structure building, maintenance and energy consumption.
• Become the premier environmental energy consultancy in the state within five years.
• Reach profitability within three years.

Company Summary company overview ) is an overview of the most important points about your company—your history, management team, location, mission statement and legal structure.">

Green Power is a Vermont-based L.L.C green energy consultancy. Green Power offers its services both to architects who are constructing new businesses as well as existing building owners/users who are looking to make their existing structure more environmentally sound.

Start-up Summary

Green Power will require the following equipment in order to begin operations:

• Computer system including three workstations, standard laser printer as well as a wide mouth printer, Internet access, and assorted software such as Microsoft Office, QuickBooks and CadArchitect (the premier architect industry software).
• Three work areas including two drawing tables and the assorted office supplies for the standard workdesks as well as the drawing tables.
• Various bookshelves, lights, and couches (for clients).
• Bike storage unit/locker.
• Refrigerator, microwave, and assorted utensils for the lunch room.

Company Ownership

The two principal owners of Green Power is Dan and Sue Lang.

Green Power offers a wide range of environmentally-conscious energy solutions related to new and existing structures. The main areas of consulting that Green Power will offer are:

• Passive heating: This applies to the construction of the new structures, designing the structure to capture and utilize heat that is either generated naturally or as a by-product of the building. Examples of passive heating include specific placement of the heating vents, the design and placement of the building and the windows.
• Grey water: This is the capture and utilization of grey water.  Grey water is water that has been used for some other source such as in the faucets or rain water that can no longer be offered as potable, but still can be used for toilet flushing or land irrigation.
• Renewable energy: This service offers customers the information needed to make intelligent decisions regarding the use of renewable energy sources. Renewable energy sources can be defined as sources of energy where the rate of energy depletion is not faster than the production rate.  Examples include: wind power, photovoltaics, hydro power, biomass, solar energy.
• Employee transportation: This service is to reduce the energy consumed by employees traveling to work. Typical aspects of the plan are outlining public transportation options, developing a company subsidized public/alternative transportation voucher, building covered bicycle lockers and shower facilities as well as other activities designed to increase the number of employees using bicycles as their main source of transportation to work.
• Efficient building construction: This focuses on the use of local building materials thereby decreasing energy needed for transportation as well as the utilization of recycled materials for construction decreasing energy demands for the manufacture of new building materials.

Market Analysis Summary how to do a market analysis for your business plan.">

Green Power has segmented the market into two distinct target market groups. The first group is architects who are building a structure either speculatively (infrequently) or for a client (generally). The second customer group is individual customers who desire environmental elements designed into their building. The niche that Green Power has chosen to participate in is a fairly new field. Green Power faces competition from eco-architects as well as from the local utilities that may have a small department that offers green energy consultation advice. The industry often operates to satisfy clients; it is the end customer that typically requests green energy designs and they either seek out a specific architect or they request their architect to receive guidance from firms such as Green Power.

Market Segmentation

Green Power has segmented its target market into two different customer groups, both equally attractive.

• The architect firms typically have two – nine partners.
• Offer both residential and commercial design work, however 67% of their work is commercial.
• The firms typically have only a handful of service providers that they work with. This means that once they find someone they trust, they develop a long-term relationship with that service provider.
• Yearly revenue ranges from $200 thousand – $5 million.

Individual customers This segment contains consumers who are either having a residential home, or a commercial structure, designed. Due to their personal environmental concerns and a recognition that it can be cost effective to have building decisions with environmental considerations, they have requested Green Power’s assistance. They are generally working directly with Green Power for their design needs and will likely then take this design criteria to their builder.

• The individual is an environmentalist and they take into account how their action will impact the environment.
• The age range of clients is 35-49.
• Average household income is $65,000. Please note that while the overriding concern in using Green Power’s services is the positive impact on the environment, a cost benefit analysis indicates that in the long term it is cost effective to adopt green energy considerations.
• 89% of the group have at least an undergraduate degree, 26% have a graduate degree.

Target Market Segment Strategy

Green Power has chosen these two market segments for compelling reasons. The architects have been focused on because they are the service providers that do the bulk of the design work for residential and commercial structures. The architects are used as sales people for Green Power’s services, they are the ones that can then sell these services to their customers. It benefits the architects because they are able to offer a wider range of value-added-services to their customers without spending capital of learning the information themselves. By aligning itself with architects, Green Power is able to offer their services to a larger group of people.

Green Power will also serve individual customers. These are people who know that they want environmental considerations made in the design of their structure and will seek out a firm such as Green Power to have this work done. Burlington is a wonderful place to locate Green Power as there is a high population of environmentally-conscious people in this city. This provides Green Power with a large market of interested customers. Additionally, this market group is attractive because people that have environmental tendencies are often vocal about their commitments or causes. By offering green energy services, Green Power allows this group of people to act on what they believe in on a personal level, adhering to the wise saying think globally, act locally.

Service Business Analysis

The environmental power consultancy industry is fairly new. Only recently has there been an emergence of firms that offer these services. This can be explained by several factors. First, people are becoming more environmentally aware these days, a function of many things including the recent problems with the Middle East and Fundamental Islamists. These recent problems have forced people to reconsider America’s dependence on oil and the need to maintain good relationships with Saudi Arabia only because of their oil. Another factor that has contributed to the growth of green power is that it has become increasingly cost effective to make business decisions while taking into account the decisions impact on the environment. For years an environmental decision was based on personal consciousness and ethics, not overriding economic factors. Now money can be saved when environmental impacts are taken into account. Please read the following section which will indicate the different players within the industry.

Competition and Buying Patterns

The competition generally takes two different forms:

Eco-architects These are architects that specialize in environmental design considerations. Typically their entire practice is based around structures that have environmental elements. Green Power could actually be within this industry niche, however they are able to serve a larger customer baser, therefore earn more revenue as well as make a positive impact in our world by offering its services to both end consumers as well as regular architects as opposed to the business model of only serving one set of customers.

Local utility The local utilities often have a department that offers free consultation for environmental design considerations. There are incentives for the utilities to attempt to curb their customer’s use of their energy. These incentives take the form of not needing to make as many capital expenditures to develop the power delivery infrastructure to accommodate the increased load for energy demands. Therefore, the more the utility is able to get their customers to conserve, the less money they have to spend on infrastructure improvements, the more money they earn. That being said, the utility often has a small department that offers tips on energy conservation. While these tips can be quite helpful, since they are offered for free for the power customers, they are not nearly as comprehensive as they could be. So while they provide good initial tips, the local utility is not a strong competitor to serve a client who is committed to making as much of a positive environmental difference as can be achieved by using a specialized firm.

The buying pattern for consumers is currently being defined as we speak, a function of how new the industry is. Currently, purchasing decisions are based on customers typically making requests for these services from their architect or they do a bit of research to determine who offers these services. As the industry becomes more mature, firms will become more established and reputation and visibility/awareness will shape buying decisions. Since there is a wide range of options regarding implementation, price is less of a consideration for the decision since most of the service providers can offer a wide range of inexpensive to expensive options.

Strategy and Implementation Summary

Green Power’s business strategy recognizes and will leverage the fact that a lot of business will be transacted through networking and word-of-mouth referrals. With this in mind, Green Power will work diligently to build alliances with architects who can co-brand their services with Green Power thereby increasing Green Power’s potential qualified customers.

Green Power will rely on its competitive edge of adopting a cost effective environmental solution so in addition to meeting environmental concerns of the customer, Green Power’s services will save the customer money over time.The marketing strategy will highlight both environmental attributes as well as economic ones.The marketing campaign will recognize the existence of two distinct market customers. Lastly, the sales strategy will offer a compelling economic analysis of how the customer can save money by adopting Green Power’s designs.

Competitive Edge

Marketing strategy.

The marketing strategy is based on developing an awareness regarding Green Power’s services to both architects and the end use consumers. Green Power will strongly use networking as a means to develop relationships with many of the city’s architects. Although Burlington is a reasonably-sized city, the architect community is fairly close knit. If one wanted, it is easy to develop active relationships with many of the different architects in Burlington. By developing these relationships, Green Power will allow the firms to become familiar with not only the services offered by Green Power, but also the personalities involved, recognizing that much of business is transacted by who you know. Advertisements will be placed in the local architect newsletter.

To reach the end user customers, Green Power will use Advertisements in the local paper as well as within the yellow pages. As a means of increasing visibility of Green Power, GP will participate in several community-based seminars that serve as a free source of information for the citizens of Burlington. Green Power believes that participating in the seminars will be an effective way of meeting many of the potential customers and allowing them to become familiar with Green Power expertise.

Sales Strategy

The sales strategy implicitly and explicitly takes into account the philosophy that the reason that many of the people are attracted to Green Power is because of its personal environmental ethics. The sales strategy will leverage this desire with the fact that environmental decisions can have positive economic impacts in the long term. Therefore the sales strategy will leverage the competitive edge of economic justification as the method for turning sales leads into customers. For this strategy to be effective, Green Power will present customers case studies and quantifiable data proving economic justification.

Sales Forecast

Green Power has adopted a conservative sales forecast for the business plan. By adopting a conservative prediction, it is easier to hit sales goals and increase the likelihood that the business plan is relevant to the business. If the sales forecasts was wildly off, it casts doubt on the application of the plan for the business.

Sales will be slow for the first several months, a function of Green Power being a start-up organization. As Green Power increases their customer pool and more architects become familiar with GP’s services, business will grow. Growth will be forecasted and preferenced as steady. The steadier it is, the easier it will be to deal with the incremental growth in work. Please view the following table and charts for a graphical representation on monthly and yearly sales.

Cost of sales for a consulting company are negligible, however, cost of architects sales will be 20%, since we will pay commissions to the architects for referrals.

Green Power has identified several milestones as a way of setting achievable goals. Performance is likely to be improved through the quest of reaching the goals. This phenomenon is well documented and is used in large corporations such as GE’s Seven Sigma Program as well as many state’s benchmarked-based assessment testing systems. Green Power has identified the following milestones:

• Business plan completion;
• 10th customer;
• Revenues exceeding $50,000;
• Profitability.

Web Plan Summary

The website will be used as a marketing tool. It will offer a description of the services offered as well as a listing of different clients served.

Website Marketing Strategy

The plan for marketing the site is fairly simple: submission to search engines such as Google and listing the website on all of the company’s correspondence and printed marketing/sales media.

Development Requirements

Green Power will utilize a local programmer to build the site.

Management Summary management summary will include information about who's on your team and why they're the right people for the job, as well as your future hiring plans.">

The company will be lead by the husband and wife team of Dan and Sue Lang. Dan grew up in Oregon and attended the University of Oregon for his undergraduate education. Dan’s major was environmental studies and business. After graduation Dan worked for a year at an environmental testing company. Through general networking, Dan was introduced to one of the three principals of a company called The Seal Company. The business model for this company was to make assessments for private and public companies as to their environmental impact. His position with The Seal Company provided him with wonderful insight into the industry of environmental assessment and helped provide him with a foundation of knowledge regarding green energy, just one of the areas of assessment. After a year of this Dan enrolled into the University of Oregon’s Master’s Architect program, taking course work in environmental design. This degree would provide Dan with the skills to make a larger impact in his community.

Sue went to the University of Burlington for undergrad and then moved out to Oregon to attend Willamette University’s MBA program. After her degree Sue moved up to Portland and worked for the Bonneville Power Administration where she worked in their renewable resource division. Much of her projects were marketing based, trying to gain public acceptance of renewable energy sources.

Personnel Plan

For the first three months of business the organization will be quite lean, consisting of just Dan and Sue. Dan will be responsible for most of the business-related issues as well as doing research and helping out with the work projects. Sue’s responsibilities will be marketing and sales based. She will work hard on developing visibility for the company as well as working with prospective customers. Green Power has forecasted that on month four it will need administrative assistance. The duties will be answering the phone, some input accounting, and other clerical functions. Initially this person will be part time but will move to full time at the beginning of year two.

Financial Plan investor-ready personnel plan .">

The following sections will outline the important Financial Assumptions.

Important Assumptions

The following table details important Financial Assumptions.

Break-even Analysis

The Break-even Analysis is indicated below.

Projected Profit and Loss

The following table and charts will indicate Projected Profit and Loss.

Projected Cash Flow

Projected Balance Sheet

The following table will indicate the Projected Balance Sheet.

Business Ratios

The following table contains typical Business Ratios of both Green Power as well as the industry as a whole.

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• Career Advice

How to Become a Renewable Energy Entrepreneur

Katie Miller is a consumer financial services expert. She worked for almost two decades as an executive, leading multi-billion dollar mortgage, credit card, and savings portfolios with operations worldwide and a unique focus on the consumer. Her mortgage expertise was honed post-2008 crisis as she implemented the significant changes resulting from Dodd-Frank required regulations.

From photovoltaic solar panels to kinetic energy adapters that generate electricity from pedaling stationary bicycles, entrepreneurs are taking advantage of the green revolution by finding and marketing renewable energy solutions.

Since we use energy for almost everything, the recent trend towards greener, more sustainable technology is creating many opportunities for entrepreneurial-minded individuals.

But is this just a fad? Or are there viable business opportunities for the long term?

Key Takeaways

• Not every entrepreneur is an investor. Consider opportunities for green services.
• Focus on the industries you're most familiar with.
• Consider government financing sources.

Renewables Are Here to Stay

As the global population rises, the reality of finite resources is sinking in. Our energy requirements cannot depend on fossil fuels forever. Advances in technology have allowed us to tap into reserves that were inaccessible in the past, but that only delays the inevitable.

These concerns, along with the negative impacts of burning fossil fuels, have created an environmentally and socially conscious mindset among different sets of economic actors, including consumers, investors, corporations, and governments. Companies and investors looking for profits have taken advantage of consumer interest in cleaner energy alternatives and government-incentivized green business initiatives.

With all these factors driving the shift towards renewable energy, now is the time to start looking for opportunities to help solve the world’s energy problems and, perhaps, make money doing it.

Recognizing the Opportunity

There are innumerable opportunities for implementing an innovative renewable energy solution. However, the best place to start looking is in your own area of expertise. Think about the industries you’ve worked in and how renewable energy could benefit them.

Also, remember that becoming a renewable energy entrepreneur doesn’t mean you have to build your own wind farm or hydroelectric dam. Renewable energy is about more than just electricity generation. It is also about storage, conservation, and distribution.

Product or Service?

You also don’t need to invent a new product or technology. You can get involved in installation, repair and maintenance, or consulting.

Think broadly, and focus on your areas of expertise.

Finally, brainstorm with friends, family, and colleagues about things that people want or need.

Some people build a business around an idea and then try to sell that idea rather than building the business around something people already want to buy. Green consumers are no different.

Green Consumer Challenge

Despite all the hype about environmental sustainability, the evidence suggests that green consumers look for the same things most consumers want: individual benefit at a low cost.

Although the environmentally conscientious market, labeled LOHAS (Lifestyles of Health and Sustainability), is growing, the green market is still relatively niche. Marketing to everyone else means educating consumers on the advantages of renewable energy, including showing them how it can add value to their lives at a lower cost.

Beyond the LOHAS

Consumers are not the only group that one needs to consider when looking for the right opportunity. Think about how the product or service will affect or be affected by others, such as suppliers, the government, the competition, and financing organizations like banks.

All of these actors could have an impact on the success of your business, so it is helpful to think about the role they will play while you’re in the development stage .

Developing a Business Plan

In devising a business plan , it is helpful to determine if there are other businesses in other regions of the world that are already offering a similar product or service. Look at the fundamentals of those businesses and use them as models for developing your own plan.

The percentage of entrepreneurs who invest some personal savings in the early stages.

Regardless of how extensive you decide to make your business plan, you definitely need to do some initial market research and summarize a business concept. You will want to analyze costs, make revenue projections, and set out some key milestones for developing and launching your business.

Talk to Potential Customers

Remember to conduct interviews with potential customers in order to get a sense of the demand for your product or service and how best to introduce it to the market.

Also, contact suppliers to get price quotes on materials and services that you will need to manufacture your product or deliver your service.

Once you’ve completed your business plan, it is time to figure out how you are going to finance your business.

Financing Your Business

Every business succeeds or fails on the basis of its ability to sustain itself financially, but it could take some time before revenues are large enough to cover costs.

Although there are a number of financing options for new businesses and startups, the research shows that almost 90% of entrepreneurs invest some personal savings at the early stages of their business. And more than 74% said that personal savings were the primary source of initial financing. Using your own savings may also show other potential investors that you are serious about the future of your new venture.

The Options for Financing

Some entrepreneurs obtain financing from banks, venture capital , angel investors, or the government. The first two options may be harder to obtain in the early stages as they tend to demand to see an existing company with strong growth potential before forking over the money. Angel investors, those who offer new and fledgling businesses capital in exchange for equity, are also possible funding options, but tend to offer smaller amounts.

While it can take some time to receive approval and not all businesses are eligible, government funding could be a good way to go given the numerous incentives for cleaner, more sustainable technologies and services.

Visit the U.S. Department of Energy site for current energy efficiency and renewable energy funding opportunities and the National Renewable Energy Laboratory (NREL) site for renewable energy project financing information.

The Bottom Line

Once you’ve had an idea, made a plan, and figured out how to finance your business, you’re on your way to becoming a renewable energy entrepreneur.

But the work has just begun. Now you’re going to have to convince consumers to spend money on your product or service. This is not easy, but it can be rewarding, especially considering that you're sustaining not only your livelihood but that of people all over the world for generations to come. Renewable energy entrepreneurs may just save the planet yet.

RetailMeNot. " 4 in 5 Consumers Think Eco-Friendly Products Cost More 'Green .'"

Eric Koester. " Green Entrepreneur Handbook: The Guide to Building and Growing a Green Business ," Page 88. CRC Press, 2016.

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Steps to Create Your Company’s Renewable Energy Strategy

August 1, 2018

Denielle Harrison

Former Manager, BSR

At the Global Climate Action Summit this fall, stakeholders from around the globe will meet in San Francisco to discuss how we can take climate ambition to the next level . Business can play a significant leadership role in accelerating the transition to a lower-carbon economy, and as we have seen through initiatives like the Renewable Energy Buyers Alliance (REBA) , renewable energy can be a key component of climate action efforts.

Corporate renewable energy procurement should be guided by a defined strategy based on available options, key priorities, and ambition. To create your strategy, you must identify your company’s motivations for procuring renewable energy, adopt supporting goals and commitments, and identify available internal human and financial resources to aid execution.

These are the steps we would suggest to help you get started.

1. Assess Your Options

The first step is to assess the landscape of renewable energy sourcing options available on the market to determine what is feasible. This will ultimately determine the renewable energy options available to you.  

Current and future policies will impact renewable energy costs, incentives, and availability. The Climate Policy Tracker can be a useful tool in assessing how regulations will impact your renewable energy choices in various jurisdictions.

After narrowing procurement options based on geography, your company must consider specific site constraints. Here are some questions to consider:

• Is your real estate portfolio suitable for onsite renewable energy generation? Leased assets often pose a challenge for onsite generation, requiring companies to liaise with their landlords; however, renewable energy availability also poses a challenge. For example, a company that leases retail space in an urban locality with poor solar energy potential may not have the option of leveraging onsite renewable energy, despite a supportive landlord.
• If your real estate portfolio is suitable for onsite generation, what is the energy capacity of potential projects/installations? Companies with owned or leased assets that support onsite renewable energy generation should consider the energy capacity of any potential projects/installations and use this to calibrate their local procurement implementation. Asset type and energy capacity should be significant considerations when negotiating contract terms with potential project developers.
• What is your time horizon? Long-term contracts should not be considered for sites that are likely to be eliminated from the real estate portfolio before the termination of the power generation contract.

2. Create Your Strategy

Once you’ve determined what your renewable energy options are, the next step is to determine your ambition level and define your strategy for renewable energy. To ensure adoption and integration within your company, this should complement both your business and sustainability strategies. A company with existing energy intensity, greenhouse gas reduction, and business growth goals should design a renewable energy strategy that complements existing objectives and initiatives to facilitate execution. Available financial resources should factor prominently into this and will ultimately dictate the realistic level of ambition your company can set.

Your strategy should reflect your company’s motivation for renewable energy procurement. For example, a company seeking to grow the renewable energy market and illustrate private-sector demand for clean power may prioritize options like new onsite or regional solar installations and choose to only purchase renewable energy attributes (e.g. RECs) that are bundled with renewable power. One example of this is Intuit’s Purely Green Program , which the company launched in part to show market demand for wind energy in Texas for its business partners, employees, and customers. Adobe’s renewable energy strategy prioritizes onsite installations and PPAs, supported by energy efficiency and policy advocacy, to meet its 100 percent renewable energy goal. Anheuser-Busch InBev’s strategy aims to source roughly 75 percent of its electricity from direct PPAs and roughly 25 percent from onsite installations.

3. Identify Opportunities to Collaborate

While renewable energy procurement variables can be complex to navigate, you do not need to work in isolation. Collaborating with other companies can help you achieve your strategic renewable energy objectives and minimize the barriers to entry for procurement.

For example, you could consider partnering with a group of companies with regional operations who are willing to enter into a shared procurement contract. This approach, known as consortium aggregation, is both feasible for companies with energy demands that are typically individually too small for project developers and companies with significant energy demands that can appropriately distribute the project load. For example, AkzoNobel, DSM, Google, and Philips leveraged this approach in the Netherlands—each company assumed an equal stake in a wind PPA there. The shared contract can also be anchored by a company that assumes the majority share of the energy, leaving smaller companies to assume small shares of the overall project load.

Initiatives like the Future of Internet Power and REBA can also provide the resources and tools for companies to execute against their renewable energy strategies together. Contact us if you’re interested in learning more about how you can help increase your climate ambition with renewable energy in advance of the Global Climate Action Summit.

Let’s talk about how BSR can help you to transform your business and achieve your sustainability goals .

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Energy Strategy for the C-Suite

• Andrew Winston,
• George Favaloro,

Many companies spend millions or even billions of dollars on energy every year. This is not just costly, but also represents an often overlooked opportunity to reduce risk, increase resilience, and add value across the board. As environmental concerns grow more urgent and new technologies emerge, companies must respond to these shifts with a robust energy strategy. This article offers a five-step framework to revamp your company’s energy policy: Create a C-level mandate, integrate energy goals into the vision and operations, track progress companywide, tap new technologies, and engage stakeholders.

Energy is no longer merely a cost to be managed.

The Problem

Sweeping environmental, social, and business trends have propelled energy up the corporate agenda. But most firms still approach energy as merely a cost to be managed.

The Solution

Companies need a cohesive energy strategy that reduces risk, improves resilience, and creates new value.

Companies must create a C-level mandate, integrate energy goals into their vision and operations, track progress companywide, tap new technologies, and engage stakeholders. These steps are not revolutionary—but systematically applying them to a company’s energy use is.

Large companies spend millions, or billions, of dollars directly on energy each year—and millions more indirectly, on supply chain, outsourcing, and logistics costs. Yet outside the most energy-intensive industries, the majority of firms approach energy as merely a cost to be managed. This is a strategic mistake that overlooks enormous opportunities to reduce risk, improve resilience, and create new value.

• Andrew Winston is one of the world’s leading thinkers on sustainable business strategy. His books include Green to Gold , The Big Pivot , and Net Positive . AndrewWinston
• George Favaloro  is a managing director in the sustainability services group at PwC. Follow him on Twitter @GeorgeFavaloro.
• Tim Healy is the chairman and CEO of EnerNOC, an energy intelligence software provider.

Partner Center

Renewable-energy development in a net-zero world

The rapid maturation of wind and solar power has been nothing short of astonishing. Not long ago, the development of new solar and wind farms was typically driven by small regional players, and the cost was significantly higher than that of a coal plant. Today, the cost of renewables has plummeted, and many solar and wind projects are undertaken by large multinational companies, which often also announce staggering development targets.

About the authors

This article is a collaborative effort by Florian Heineke, Nadine Janecke, Holger Klärner, Florian Kühn , Humayun Tai , and Raffael Winter , representing views from McKinsey’s Electric Power & Natural Gas Practice.

Over the past decade, the growth of renewable energy has consistently and dramatically outperformed nearly all expectations (Exhibit 1). Upward corrections of estimates have become something of a ritual.

But this growth story is just getting started. As countries aim to reach ambitious decarbonization targets, renewable energy—led by wind and solar—is poised to become the backbone of the world’s power supply. Along with capacity additions from major energy providers, new types of players are entering the market (Exhibit 2). Today’s fast followers include major oil and gas companies, which aim to shift their business models to profit from the increased demand for renewables and the electrification of vehicles, and private-equity players and institutional investors that make renewable energy a central component of their investment strategy. Leaders in the shipping industry are investing in renewables to enable the production of hydrogen and ammonia as zero-emission fuel sources; steel manufacturers are eyeing green hydrogen to decarbonize their steel production, with renewables providing the green electricity for the process. Car manufacturing companies are also striking renewable-energy deals to help power their operations and manufacturing, as well as making investments in wind and solar projects.

McKinsey estimates that by 2026, global renewable-electricity capacity will rise more than 80 percent from 2020 levels (to more than 5,022 gigawatts). 1 Global Energy Perspective 2022 , McKinsey, April 2022. Of this growth, two-thirds will come from wind and solar, an increase of 150 percent (3,404 gigawatts). By 2035, renewables will generate 60 percent of the world’s electricity. 2 Global Energy Perspective 2022 , McKinsey, April 2022. But even these projections might be too low. Three years ago, we looked at advances made by renewable energy and asked, “How much faster can they grow?” 3 “ Rethinking the renewable strategy for an age of global competition ,” McKinsey, October 11, 2019. The answer is: faster than you think they can.

Three core capabilities for wind and solar developers

This race to build additional solar and wind capacity increases the pressure on developers to execute efficiently and heightens competition for finite resources. Still, the three winning capabilities we identified three years ago as important for building or expanding a renewables business are even more critical now. They form the bedrock required to tackle upcoming challenges:

• Value-chain excellence. As competition intensifies and government support for renewables subsides, strong capabilities across the entire value chain are the required cost of admission. For instance, gaining access to scarce amounts of attractive land will require differentiation in project origination and development. As margins squeeze and operators’ exposure to risk increases, ambitious companies will want to explore new, profitable offtake markets for their electricity, such as data centers or hydrogen electrolyzers for industrial production.
• Economies of scale and skill. Driven by the rapid scaling of the renewables industry, many players have built efficient operating models. However, finding employees with the necessary skills and capabilities, particularly in high-demand areas such as project development and engineering, is becoming a bottleneck for growth ambitions.
• Agile operating model. Agility and speed will be key in finding innovative ways to integrate partners and in establishing robust, high-performing supply chains. They will also enable businesses to shift resources quickly to the biggest value pools and respond to changes in the landscape, such as shifting regulations or price volatility.

Four challenges that will define the new era of renewable energy

Leveraging these capabilities as a strong foundation, successful renewables developers must navigate an increasingly complex and competitive landscape. Specifically, they will have to focus on and address four emerging challenges:

• A scarcity of top-quality land. Developers are in a constant scramble to identify new sites with increasing speed. Our analysis in Germany, a country aiming to nearly double its share of electricity coming from renewables by 2030, offers a glimpse into the constraints. Of the 51 percent of the country’s land that is potentially suitable for onshore wind farms, regulatory, environmental, and technical constraints eliminate all but 9 percent. 4 McKinsey land use optimization model. Meeting capacity targets will mean adding wind turbines to 4 to 6 percent of the country, giving developers very little room for error.
• A blue-collar and white-collar labor shortage. Across economies, the “Great Attrition” is making it difficult for companies to find and keep employees. Since April 2021, 20 million to 25 million US workers have quit their jobs, and 40 percent of employees globally say they are at least somewhat likely to leave their current position in the next three to six months. 5 Aaron De Smet, Bonnie Dowling, Bryan Hancock, and Bill Schaninger, “ The Great Attrition is making hiring harder. Are you searching the right talent pools? ,” McKinsey Quarterly , July 13, 2022; Table 4. Quits levels and rates by industry and region, seasonally adjusted, US Bureau of Labor Statistics, updated October 4, 2022. This environment presents a particularly acute challenge for industries such as renewable energy, where specific technical expertise and experience are crucial elements of success. For instance, our analysis suggests that between now and 2030, the global renewables industry will need an additional 1.1 million blue-collar workers to develop and construct wind and solar plants, and another 1.7 million to operate and maintain them. 6 Renewable energy benefits: Leveraging local capacity for onshore wind , International Renewable Energy Agency (IRENA), 2017; Renewable energy benefits: Leveraging local capacity for offshore wind , IRENA, 2018; Renewable energy benefits: Leveraging local capacity for solar PV , IRENA, 2017. This includes construction laborers, electricians, truck and semitrailer drivers, and operating engineers.
• Supply chain pressures. The soaring cost of steel, manufacturing disruptions caused by extended lockdowns in China, and transportation backlogs at ports are already making it difficult for wind and solar developers to complete projects in their pipeline on time and on budget. Some of these pressures will abate as others move to the forefront. For instance, many of the raw materials needed to manufacture solar panels and wind turbines are projected to be in short supply. This includes nickel, copper, and rare earth metals such as neodymium and praseodymium, which are indispensable for the creation of magnets used in wind turbine generators.
• Pressure on profits and volatility of returns in the short term. The increasing number of players moving into the renewable-development space, combined with reduced levels of government support and higher costs of materials, technology, and financing, is putting pressure on returns. At the same time, an all-time-high price volatility creates uncertainty and market risk.

Renewables developers will need to act decisively to prepare for these upcoming challenges. In a series of future articles, we provide detailed insights on each of these pressures and share potential ways players can take action.

Florian Heineke is a consultant in McKinsey’s Frankfurt office; Nadine Janecke is an associate partner in the Hamburg office; Holger Klärner is a partner in the Berlin office; Florian Kühn is a partner in the Oslo office; Humayun Tai is a senior partner in the New York office; and Raffael Winter is a partner in the Düsseldorf office.

The authors wish to thank Nadia Christakou, Florent Erbar, David Frankel, Emil Hosius, Anna Kemp, Nadine Palmowski, Andreas Schlosser, Sophia Spitzer, Christian Staudt, and Jakub Zivansky for their contributions to this article.

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How to Start a Renewable Business

• Small Business
• Setting Up a New Business
• Starting a Business
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Government Energy Saving Grants

How to start a reseller business, how to start my own manure selling business.

• How to Open a Pumpkin Farm
• How to Get a Loan for a First Time Business

Our sources of energy are becoming more and more scarce and increasingly expensive, and eco-friendly green living is becoming more an essential than optional. Correspondingly, starting a renewable product or energy business can be a profitable endeavor that does our environment some good as well. Many renewable energy businesses requires no start-up fees or formal training.

Determine what type of renewable business you wish to establish. Many types of business opportunities exist in renewable and green energy fields with different goals, objectives, expenses and operational procedures. For example, Energy Automation Systems provides a solar products affiliate sales program for energy conservation with a one-time start-up fee of $59,000 at the time of publication. On the other hand, a solar panel cleaning business offered by the Solar Maid Company requires no franchise fees or royalties.

Check what permits you might need. Check with your local governing agencies, such as the secretary of state, county commissioners or city council to determine what -- if any -- types of business licenses and permits you need to legally operate your business. Business license regulations vary from state to state, but no matter where where you operate, the IRS requires that you have an employer identification number to claim your earnings and pay your taxes. You can apply for an EIN by visiting the IRS website.

Educate yourself about the green and renewable energy industry. Though you don't need to have a college degree to become a professional in the renewable energy industry, it does require knowledge and passion to succeed. Research all aspects of the environmental state, national recycling and energy efficiency statistics, product evaluations and consumer needs for renewable sources. Look for business opportunities that include training programs, seminars and support.

Carefully investigate your potential suppliers. Unfortunately, some renewable energy companies don't survive long due to poor business habits or inferior products. Once you've narrowed your options for investments, affiliate participation or service agreements, conduct a background check on the companies you are interested in working with. Search for all available reviews and rating with the Better Business Bureaus before joining any affiliate programs or making an investment.

Create business and marketing plans. Your business plan is basically a handbook guiding you -- and your investors -- through each step of building your company. Include an executive summary, product information, operational procedures, financial aspects, goals and projections. Create a solid marketing strategy outlining your target consumer and how you plan to reach them--advertising, social media, sales calls and other avenues.

Acquire any necessary capital. Depending on the type of renewable business you are establishing, you may be eligible for grant funding. Check with U.S. Small Business Administration or Grants.gov to see if you qualify for any small-business grants. You will likely need to write a proposal, complete an application and provide copies of your business and marketing plan. If you are ineligible for energy business grants or are in need of additional funding, explore loan opportunities.

Pinpoint your target consumer and execute your business and marketing plan. Once you have settled the logistics of your start-up and secured necessary funding, it's time to engage your target consumer and make the sales pitch. Research local demographics to determine where the most potential customers are. Look for businesses, homeowners, landlords, school districts, construction companies and other facilities, organizations and consumers that would benefit from your renewable products or services.

• Energy Consumers Edge: Renewable Energy Start-Up Business Investing
• StartupBizHub: Tips to Start Renewable Energy Business
• To ensure a smooth start-up, consider having consultations with industry professionals such as accountants, legal advisers, grant writers and business and marketing specialists.

Michelle Renee is a professional trainer and quality assurance consultant in the career, education and customer service industries, with two decades of experience in food/beverage and event coordinating management. Renee has been published by Lumino and Career Flight as well as various food, education and business publications.

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The world now invests almost twice as much in clean energy as it does in fossil fuels…, global investment in clean energy and fossil fuels, 2015-2024, …but there are major imbalances in investment, and emerging market and developing economies (emde) outside china account for only around 15% of global clean energy spending, annual investment in clean energy by selected country and region, 2019 and 2024, investment in solar pv now surpasses all other generation technologies combined, global annual investment in solar pv and other generation technologies, 2021-2024, the integration of renewables and upgrades to existing infrastructure have sparked a recovery in spending on grids and storage, investment in power grids and storage by region 2017-2024, rising investments in clean energy push overall energy investment above usd 3 trillion for the first time.

Global energy investment is set to exceed USD 3 trillion for the first time in 2024, with USD 2 trillion going to clean energy technologies and infrastructure. Investment in clean energy has accelerated since 2020, and spending on renewable power, grids and storage is now higher than total spending on oil, gas, and coal.

As the era of cheap borrowing comes to an end, certain kinds of investment are being held back by higher financing costs. However, the impact on project economics has been partially offset by easing supply chain pressures and falling prices. Solar panel costs have decreased by 30% over the last two years, and prices for minerals and metals crucial for energy transitions have also sharply dropped, especially the metals required for batteries.

The annual World Energy Investment report has consistently warned of energy investment flow imbalances, particularly insufficient clean energy investments in EMDE outside China. There are tentative signs of a pick-up in these investments: in our assessment, clean energy investments are set to approach USD 320 billion in 2024, up by more 50% since 2020. This is similar to the growth seen in advanced economies (+50%), although trailing China (+75%). The gains primarily come from higher investments in renewable power, now representing half of all power sector investments in these economies. Progress in India, Brazil, parts of Southeast Asia and Africa reflects new policy initiatives, well-managed public tenders, and improved grid infrastructure. Africa’s clean energy investments in 2024, at over USD 40 billion, are nearly double those in 2020.

Yet much more needs to be done. In most cases, this growth comes from a very low base and many of the least-developed economies are being left behind (several face acute problems servicing high levels of debt). In 2024, the share of global clean energy investment in EMDE outside China is expected to remain around 15% of the total. Both in terms of volume and share, this is far below the amounts that are required to ensure full access to modern energy and to meet rising energy demand in a sustainable way.

Power sector investment in solar photovoltaic (PV) technology is projected to exceed USD 500 billion in 2024, surpassing all other generation sources combined. Though growth may moderate slightly in 2024 due to falling PV module prices, solar remains central to the power sector’s transformation. In 2023, each dollar invested in wind and solar PV yielded 2.5 times more energy output than a dollar spent on the same technologies a decade prior.

In 2015, the ratio of clean power to unabated fossil fuel power investments was roughly 2:1. In 2024, this ratio is set to reach 10:1. The rise in solar and wind deployment has driven wholesale prices down in some countries, occasionally below zero, particularly during peak periods of wind and solar generation. This lowers the potential for spot market earnings for producers and highlights the need for complementary investments in flexibility and storage capacity.

Investments in nuclear power are expected to pick up in 2024, with its share (9%) in clean power investments rising after two consecutive years of decline. Total investment in nuclear is projected to reach USD 80 billion in 2024, nearly double the 2018 level, which was the lowest point in a decade.

Grids have become a bottleneck for energy transitions, but investment is rising. After stagnating around USD 300 billion per year since 2015, spending is expected to hit USD 400 billion in 2024, driven by new policies and funding in Europe, the United States, China, and parts of Latin America. Advanced economies and China account for 80% of global grid spending. Investment in Latin America has almost doubled since 2021, notably in Colombia, Chile, and Brazil, where spending doubled in 2023 alone. However, investment remains worryingly low elsewhere.

Investments in battery storage are ramping up and are set to exceed USD 50 billion in 2024. But spending is highly concentrated. In 2023, for every dollar invested in battery storage in advanced economies and China, only one cent was invested in other EMDE.

Investment in energy efficiency and electrification in buildings and industry has been quite resilient, despite the economic headwinds. But most of the dynamism in the end-use sectors is coming from transport, where investment is set to reach new highs in 2024 (+8% compared to 2023), driven by strong electric vehicle (EV) sales.

The rise in clean energy spending is underpinned by emissions reduction goals, technological gains, energy security imperatives (particularly in the European Union), and an additional strategic element: major economies are deploying new industrial strategies to spur clean energy manufacturing and establish stronger market positions. Such policies can bring local benefits, although gaining a cost-competitive foothold in sectors with ample global capacity like solar PV can be challenging. Policy makers need to balance the costs and benefits of these programmes so that they increase the resilience of clean energy supply chains while maintaining gains from trade.

In the United States, investment in clean energy increases to an estimated more than USD 300 billion in 2024, 1.6 times the 2020 level and well ahead of the amount invested in fossil fuels. The European Union spends USD 370 billion on clean energy today, while China is set to spend almost USD 680 billion in 2024, supported by its large domestic market and rapid growth in the so-called “new three” industries: solar cells, lithium battery production and EV manufacturing.

Overall upstream oil and gas investment in 2024 is set to return to 2017 levels, but companies in the Middle East and Asia now account for a much larger share of the total

Change in upstream oil and gas investment by company type, 2017-2024, newly approved lng projects, led by the united states and qatar, bring a new wave of investment that could boost global lng export capacity by 50%, investment and cumulative capacity in lng liquefaction, 2015-2028, investment in fuel supply remains largely dominated by fossil fuels, although interest in low-emissions fuels is growing fast from a low base.

Upstream oil and gas investment is expected to increase by 7% in 2024 to reach USD 570 billion, following a 9% rise in 2023. This is being led by Middle East and Asian NOCs, which have increased their investments in oil and gas by over 50% since 2017, and which account for almost the entire rise in spending for 2023-2024.

Lower cost inflation means that the headline rise in spending results in an even larger rise in activity, by approximately 25% compared with 2022. Existing fields account for around 40% total oil and gas upstream investment, while another 33% goes to new fields and exploration. The remainder goes to tight oil and shale gas.

Most of the huge influx of cashflows to the oil and gas industry in 2022-2023 was either returned to shareholders, used to buy back shares or to pay down debt; these uses exceeded capital expenditure again in 2023. A surge in profits has also spurred a wave of mergers and acquisitions (M&A), especially among US shale companies, which represented 75% of M&A activity in 2023. Clean energy spending by oil and gas companies grew to around USD 30 billion in 2023 (of which just USD 1.5 billion was by NOCs), but this represents less than 4% of global capital investment on clean energy.

A significant wave of new investment is expected in LNG in the coming years as new liquefaction plants are built, primarily in the United States and Qatar. The concentration of projects looking to start operation in the second half of this decade could increase competition and raise costs for the limited number of specialised contractors in this area. For the moment, the prospect of ample gas supplies has not triggered a major reaction further down the value chain. The amount of new gas-fired power capacity being approved and coming online remains stable at around 50-60 GW per year.

Investment in coal has been rising steadily in recent years, and more than 50 GW of unabated coal-fired power generation was approved in 2023, the most since 2015, and almost all of this was in China.

Investment in low-emissions fuels is only 1.4% of the amount spent on fossil fuels (compared to about 0.5% a decade ago). There are some fast-growing areas. Investments in hydrogen electrolysers have risen to around USD 3 billion per year, although they remain constrained by uncertainty about demand and a lack of reliable offtakers. Investments in sustainable aviation fuels have reached USD 1 billion, while USD 800 million is going to direct air capture projects (a 140% increase from 2023). Some 20 commercial-scale carbon capture utilisation and storage (CCUS) projects in seven countries reached final investment decision (FID) in 2023; according to company announcements, another 110 capture facilities, transport and storage projects could do the same in 2024.

Energy investment decisions are primarily driven and financed by the private sector, but governments have essential direct and indirect roles in shaping capital flows

Sources of investment in the energy sector, average 2018-2023, sources of finance in the energy sector, average 2018-2023, households are emerging as important actors for consumer-facing clean energy investments, highlighting the importance of affordability and access to capital, change in energy investment volume by region and fuel category, 2016 versus 2023, market sentiment around sustainable finance is down from the high point in 2021, with lower levels of sustainable debt issuances and inflows into sustainable funds, sustainable debt issuances, 2020-2023, sustainable fund launches, 2020-2023, energy transitions are reshaping how energy investment decisions are made, and by whom.

This year’s World Energy Investment report contains new analysis on sources of investments and sources of finance, making a clear distinction between those making investment decisions (governments, often via state-owned enterprises (SOEs), private firms and households) and the institutions providing the capital (the public sector, commercial lenders, and development finance institutions) to finance these investments.

Overall, most investments in the energy sector are made by corporates, with firms accounting for the largest share of investments in both the fossil fuel and clean energy sectors. However, there are significant country-by-country variations: half of all energy investments in EMDE are made by governments or SOEs, compared with just 15% in advanced economies. Investments by state-owned enterprises come mainly from national oil companies, notably in the Middle East and Asia where they have risen substantially in recent years, and among some state-owned utilities. The financial sustainability, investment strategies and the ability for SOEs to attract private capital therefore become a central issue for secure and affordable transitions.

The share of total energy investments made or decided by private households (if not necessarily financed by them directly) has doubled from 9% in 2015 to 18% today, thanks to the combined growth in rooftop solar installations, investments in buildings efficiency and electric vehicle purchases. For the moment, these investments are mainly made by wealthier households – and well-designed policies are essential to making clean energy technologies more accessible to all . A comparison shows that households have contributed to more than 40% of the increase in investment in clean energy spending since 2016 – by far the largest share. It was particularly pronounced in advanced economies, where, because of strong policy support, households accounted for nearly 60% of the growth in energy investments.

Three quarters of global energy investments today are funded from private and commercial sources, and around 25% from public finance, and just 1% from national and international development finance institutions (DFIs).

Other financing options for energy transition have faced challenges and are focused on advanced economies. In 2023, sustainable debt issuances exceeded USD 1 trillion for the third consecutive year, but were still 25% below their 2021 peak, as rising coupon rates dampened issuers’ borrowing appetite. Market sentiment for sustainable finance is wavering, with flows to ESG funds decreasing in 2023, due to potential higher returns elsewhere and credibility concerns. Transition finance is emerging to mobilise capital for high-emitting sectors, but greater harmonisation and credible standards are required for these instruments to reach scale.

A secure and affordable transitioning away from fossil fuels requires a major rebalancing of investments

Investment change in 2023-2024, and additional average annual change in investment in the net zero scenario, 2023-2030, a doubling of investments to triple renewables capacity and a tripling of spending to double efficiency: a steep hill needs climbing to keep 1.5°c within reach, investments in renewables, grids and battery storage in the net zero emissions by 2050 scenario, historical versus 2030, investments in end-use sectors in the net zero emissions by 2050 scenario, historical versus 2030, meeting cop28 goals requires a doubling of clean energy investment by 2030 worldwide, and a quadrupling in emde outside china, investments in renewables, grids, batteries and end use in the net zero emissions by 2050 scenario, 2024 and 2030, mobilising additional, affordable financing is the key to a safer and more sustainable future, breakdown of dfi financing by instrument, currency, technology and region, average 2019-2022, much greater efforts are needed to get on track to meet energy & climate goals, including those agreed at cop28.

Today’s investment trends are not aligned with the levels necessary for the world to have a chance of limiting global warming to 1.5°C above pre-industrial levels and to achieve the interim goals agreed at COP28. The current momentum behind renewable power is impressive, and if the current spending trend continues, it would cover approximately two-thirds of the total investment needed to triple renewable capacity by 2030. But an extra USD 500 billion per year is required in the IEA’s Net Zero Emissions by 2050 Scenario (NZE Scenario) to fill the gap completely (including spending for grids and battery storage). This equates to a doubling of current annual spending on renewable power generation, grids, and storage in 2030, in order to triple renewable capacity.

The goal of doubling the pace of energy efficiency improvement requires an even greater additional effort. While investment in the electrification of transport is relatively strong and brings important efficiency gains, investment in other efficiency measures – notably building retrofits – is well below where it needs to be: efficiency investments in buildings fell in 2023 and are expected to decline further in 2024. A tripling in the current annual rate of spending on efficiency and electrification – to about USD 1.9 trillion in 2030 – is needed to double the rate of energy efficiency improvements.

Anticipated oil and gas investment in 2024 is broadly in line with the level of investment required in 2030 in the Stated Policies Scenario, a scenario which sees oil and natural gas demand levelling off before 2030. However, global spare oil production capacity is already close to 6 million barrels per day (excluding Iran and Russia) and there is a shift expected in the coming years towards a buyers’ market for LNG. Against this backdrop, the risk of over-investment would be strong if the world moves swiftly to meet the net zero pledges and climate goals in the Announced Pledges Scenario (APS) and the NZE Scenario.

The NZE Scenario sees a major rebalancing of investments in fuel supply, away from fossil fuels and towards low-emissions fuels, such as bioenergy and low-emissions hydrogen, as well as CCUS. Achieving net zero emissions globally by 2050 would mean annual investment in oil, gas, and coal falls by more than half, from just over USD 1 trillion in 2024 to below USD 450 billion per year in 2030, while spending on low-emissions fuels increases tenfold, to about USD 200 billion in 2030 from just under USD 20 billion today.

The required increase in clean energy investments in the NZE Scenario is particularly steep in many emerging and developing economies. The cost of capital remains one of the largest barriers to investment in clean energy projects and infrastructure in many EMDE, with financing costs at least twice as high as in advanced economies as well as China. Macroeconomic and country-specific factors are the major contributors to the high cost of capital for clean energy projects, but so, too, are risks specific to the energy sector. Alongside actions by national policy makers, enhanced support from DFIs can play a major role in lowering financing costs and bringing in much larger volumes of private capital.

Targeted concessional support is particularly important for the least-developed countries that will otherwise struggle to access adequate capital. Our analysis shows cumulative financing for energy projects by DFIs was USD 470 billion between 2013 and 2021, with China-based DFIs accounting for slightly over half of the total. There was a significant reduction in financing for fossil fuel projects over this period, largely because of reduced Chinese support. However, this was not accompanied by a surge in support for clean energy projects. DFI support was provided almost exclusively (more than 90%) as debt (not all concessional) with only about 3% reported as equity financing and about 6% as grants. This debt was provided in hard currency or in the currency of donors, with almost no local-currency financing being reported.

The lack of local-currency lending pushes up borrowing costs and in many cases is the primary reason behind the much higher cost of capital in EMDE compared to advanced economies. High hedging costs often make this financing unaffordable to many of the least-developed countries and raises questions of debt sustainability. More attention is needed from DFIs to focus interventions on project de-risking that can mobilise much higher multiples of private capital.

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Author: Natalie Burclaff, Business Section Head, Science & Business Reading Room.

Created: December 2020

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Renewable energy is generated by sources that can be replenished within a relatively short period of time. Solar, wind, water, biomass, and geothermal are all renewable energy sources. 1 Green energy, while similar to renewable energy, is a subset of sources that have the highest environmental benefits. 2 Clean energy sources emit low carbon, and include renewable energy sources along with nuclear power. 3

Renewable energy sources have been used to generate heat and power for much of human history, and more relatively recently, electricity. Renewable energy makes up 12% of primary energy use in the United States and 11% worldwide. 4 While there is still a strong dependence on fossil fuels for heating, electricity and transportation, the oil crises of the 1970s pushed for stronger investment into alternative energy sources. Additionally, the negative effects of climate change have increased public demand in finding non-fossil fuel based energy, aided by government incentives and standards. 5

This guide focuses on resources relevant to researching the business of generating and distributing renewable energy. To that end, there are sections of this guide about the power grid and the electric power sector which consumes energy in order to generate and sell electricity. This guide does not include technical or engineering information on developing renewable energy technologies. Information on the power grid, climate change, and energy policy are included as they relate to the renewable energy industry. For information on corporate responsibility, which includes businesses that use renewable or green energies, see Corporate Social Responsibility: A Resource Guide . Additional information on green businesses is in Green Business: Sources of Information . Most of the guide takes a U.S. perspective, but international sources are included throughout.

For an excellent overview U.S. energy sources, there have been a number of Congressional Research Service reports on renewable energy topics, including:

• Lawson, Ashley J. Variable Renewable Energy . CRS In Focus IF11257. Congressional Research Service, June 25, 2019.
• 21st Century U.S. Energy Sources: A Primer. CRS Report R44854. Congressional Research Service, March 16, 2021. The section on renewable energy starts on page 25.

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Part of the Science & Business Reading Room  at the Library of Congress, the Business Section is the starting point for conducting research at the Library of Congress in the subject areas of business and economics. Here, reference specialists in specific subject areas of business assist patrons in formulating search strategies and gaining access to the information and materials contained in the Library's rich collections of business and economics materials.

• U.S. Energy Information Administration, " What is Renewable Energy? " (2021, May 21). Back to text
• U.S. Environmental Protection Agency, " Renewable Energy at EPA, " Back to text
• U.S. Department of Energy, " Clean Energy ."  Back to text
• U.S. Energy Information Administration, Table 2.1 Primary Energy Production by Source , (July 2021); Our World in Data: Renewable Energy, " Renewable Energy Generation External ," Back to text
• Congressional Research Service, 21st Century U.S. Energy Sources: A Primer , R44854 (2018).  Back to text
• Next: General Renewable Energy Resources >>
• Last Updated: May 13, 2024 4:32 PM
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8 Focus Areas for the Renewable Energy Sector

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As more companies seek to reduce their carbon footprint, the renewable energy sector continues to grow, presenting both opportunities and red flags for organizations with renewable energy growth plans.

Key takeaways, global renewable energy capacity is expected to grow by 2,400 gigawatts between now and 2027. that’s an amount equal to the entire power capacity of china today. 1, emerging red flags could threaten this momentum — from talent issues, inflation and cost fluctuations to geopolitical risks, supply chain restrictions and more., organizations should carefully consider these key risks and benefits to help them make better decisions around their renewable energy strategy..

The global transition to renewable energy will be vital to mitigate CO 2 emissions and reduce our reliance on fossil fuels.

In 2023, 50 percent more renewable capacity was added globally year-over-year. The next five years are expected to see the fastest growth in the past 30 years to achieve COP28’s goal of tripling global capacity by 2030. 2

But while the renewable energy sector continues to grow, there are a variety of emerging obstacles that could threaten its momentum.

Focusing on these key areas can help organizations make better decisions around the promises and challenges of their renewable energy programs.

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The business case around renewables is still very strong. Although there are pressures around inflation, supply chain and, in some areas, the regulatory environment, there are huge amounts of innovation and development happening.

1. increased legislation.

As world leaders work to limit the effects of climate change, a variety of laws and regulations have emerged that impact renewable energy projects, including:

• The landmark United Nations Paris Agreement, a legally binding international treaty on climate change, went into force in 2016 to limit the temperature increase to 1.5 degrees Celsius above pre-industrial levels. 3
• In early 2023, the International Sustainability Standards Board issued its IFRS S1 and IFRS S2 standards. Effective January 2024, these aim to harmonize corporate environmental disclosures across the globe. 4
• Under the Inflation Reduction Act (IRA) in the U.S., roughly $370 billion in tax incentives and renewable energy tax credits are available to developers and owners of renewables, including but not limited to, wind farms, solar farms, green hydrogen and carbon capture. 5  “It’s really been a catalyst for renewable energy growth because it lowers overall project costs and encourages investments in emerging technologies, like green hydrogen,” says Carol Stark, managing director and Renewable Energy practice leader in North America.
• Canada enacted Clean Fuel Regulations 6  and established the Clean Fuels Fund, 7  the Emissions Reduction Fund, 8 and the Hydrogen Strategy for Canada 9  with the intent of achieving its net-zero emissions by 2050.
• The European Green Deal 10  in the European Union (EU), strives to make Europe the first climate-neutral continent, with net-zero emissions of greenhouse gasses by 2050.

Insights to Consider:

The IRA in the U.S. is having a profound global impact on transactions, including M&A deals. Since the law was passed in August 2022, $110 billion has been poured into clean energy projects — 60 percent of which came from foreign companies .

These results are increasing other countries’ appetite to implement their own regulation with similar levels of inbound investment. It’s possible that tax credits — now more accessible under the IRA — will become a global phenomenon.

The transfer of tax credits enables corporations to purchase tax credits from renewable energy sponsors and developers through simple purchase and sale agreements. “Tax credit insurance is helping get deals done,” says Corey Lewis, Co-Head of Aon’s North American Tax Insurance Practice and Tax Credit Insurance Practice Leader. "It encourages investments and the purchase of credits, especially where clients are looking for additional certainty.”

2. Operational Resilience

2023 saw $380 billion in economic losses from all global natural disasters. Just $118 billion was insured, reflecting a significant global protection gap. However, there is an opportunity to close this gap and build operational resilience.

A total project lifecycle risk advisory approach can help organizations better understand and manage risk, while minimizing business interruptions related to the changing climate. This framework uses three strategies — assess, quantify and manage — and provides an iterative and holistic approach to financing current and emerging risks. Aon’s Climate Modeling team plays a critical role in assessing and quantifying climate risk. They have invested heavily in refining the modeling associated with NatCat and severe convective Storm. Up until this investment, the industry models did not accurately assess the severe convective storm risk, which has negatively impacted renewable energy asset owners, along with other industries.

Managing risk could also include innovative alternative risk transfer solutions such as parametric insurance .

3. Shareholder Pressure

Shareholders across industries have called for stronger transparency on energy financing and other climate-related issues. This includes increases in climate disclosures and alignment of business strategies to climate goals. The use of renewable energy sources is critical to this process. 11

To proactively address climate-related risks and opportunities, organizations can use advanced analytics . Doing so will help build resilience and provide deeper insights around renewable energy, while also supporting energy transition investment.

There is no one-size-fits-all approach for shareholders when considering climate change investing. Investors considering climate change as investment are encouraged to use this five-step approach to help them assess which strategies work for them.

4. Greenwashing

Greenwashing is a tactic some companies use to deliberately deceive stakeholders about their environmental, social and governance (ESG) commitments, which can include renewable energy strategies. While it’s not a new phenomenon, stakeholders (investors, employees and customers) are increasingly expecting companies to not only make commitments to ESG topics, but also hold them accountable when commitments are not met.

There is a solid connection between good governance and fewer, less severe losses in directors’ and officers’ (D&O) insurance . Companies therefore benefit from highly engaged D&O insurers that offer competitive options in exchange for competent governance. Even further, incorporating a company’s environmental and social impact will improve ratings and D&O policy renewal discussions, in addition to helping avoid red flags.

In the UK, renewable energy now supplies 42 percent of generated electricity, up from 3 percent in 2000.

Source: World Economic Forum

5. Carbon Taxation and Credits

Carbon tax directly and accurately puts a price on carbon emissions released from the burning of fossil fuels. This pricing aims to incorporate the costs of pollution and climate damage into market prices to incentivize reduced emissions and drive the adoption of clean energy alternatives across economic sectors. Carbon credits have a tradeable component and are issued to organizations representing their emissions limit. If a company can limit emissions below its cap, for example, its surplus of credits can then be retained or sold to other companies that may have exceeded their emissions cap.

The developing carbon market offers unique opportunities for businesses and insurers. Carbon credits could help companies meet their emissions goals. “There is a recognition that purchasing carbon credits can be a legitimate part of a decarbonization strategy — especially in cases when companies have done everything within their power to reduce their emissions and only apply these credits to residual emissions that just simply cannot be removed or reduced through operational efficiencies alone,” says Natalia Moudrak, managing director, climate resiliency leader at Aon’s Public Sector Partnership. 12

6. Clean Technology

The goal of limiting global warming to 1.5 degrees Celsius requires a global clean energy investment of nearly $4.5 trillion annually by 2030. In 2023, renewable energy spend totaled $1.8 trillion. 13 Much of that investment will be made in smarter, new clean technology to capture CO 2 emissions.

The rate of technological innovation is a key enabler for the renewable energy sector. With new technology comes the need to understand risk, exposures and potential options for risk transfer.

To keep up with the rapid pace of innovation, renewable energy developers may also use new clean technology with little historical experience.

By capitalizing on state and private investment opportunities to undertake research and development, businesses in the renewables sector can more rapidly deliver projects to market with efficient and reliable technologies. Innovations, such as sodium-ion batteries and electrolytic hydrogen-based direct reduction processes, demonstrate how renewable energy investment is helping businesses reduce capital costs, improve safety and reduce project risk, while at the same time creating a cleaner, greener future for the planet.

The insurance industry can also unlock capital for clean technology . The industry should consider longer policy terms than the usual annual renewal cycle. New clean technologies, for example, are usually not investable at scale. This impedes financing for green projects as the long-term insurability of assets comes into question. It also places more risk on investors who may not finance certain projects. Ensuring stable and predictable insurance coverage over longer periods could help free up capital flows. 14

7. Talent Shortage

With global renewable power capacity expected to grow exponentially, attracting, upskilling and retaining talent is critical for operational sustainability. 15 However, there are many workforce challenges organizations are facing:

• Talent Shortages: There are currently 12.7 million global energy jobs, an increase of more than 5 million since 2012. By 2030, the clean energy transition will generate another 10.3 million new jobs. 16 Additionally, just one in eight workers has one or more green skills. 17
• Rising Human Capital Costs: The inflationary environment has driven up fixed costs exponentially. This has been further compounded by organizations having to pay salary premiums, sign-on bonuses and other perks to hire for in-demand skills in the sector.
• Talent Sustainability: An aging workforce, robust competition for talent and the shifting of social values are changing the recruiting landscape.

To meet growth plans and fill the surge in emerging roles, the renewables sector should commit to building a sustainable and resilient talent strategy. Companies should ensure they have strong employee value propositions in place with meaningful work and development opportunities to help attract and retain their talent in a highly competitive environment.

8. Supply Chain Logistics

Ongoing supply chain challenges in the renewables sector can impact both new project development and operational assets. Despite a global commitment to accelerate the development of renewable energy infrastructure, supply chain vulnerabilities pose a threat to the pace of renewables development. These challenges can be even more acute for international projects, where supplies are sourced from a range of countries.

A lack of critical plant and equipment, such as suitable installation and maintenance vessels for the offshore industry, has also slowed supply chains, lengthened project schedules and made some developments nonviable. Exposure to supply chain bottlenecks for existing assets can lead to operational downtime, compounding losses that may have occurred during the development phase.

“We are still dependent on foreign manufacturers for renewable energy components,” adds Stark. “There is pressure to accelerate the green energy transition and the big economic powers are competing for the same assets. That in itself is creating supply chain issues.”

Corporate clients who operate or develop portfolios of assets can explore the feasibility of spare part pooling and framework agreements with suppliers to mitigate supply chain risks. Standardization of technology in the sector can also increase additional flexibility to meet supply chain needs. 18

U.S. utility-scale solar capacity additions outpaced other generation sources in H1 2023, up 36 percent against the same period in 2022.

Source: 2024 renewable energy industry outlook | Deloitte

• Corey Lewis Managing Director, Co-Head North American Tax Insurance Practice, Tax Credit Insurance Practice Leader
• Euan Nicolson Global Energy Transition, UK
• Daniel Ocampo Senior Risk Consultant, Natural Resources, Global Risk Consulting
• Mark Potter Renewable Energy Leader, EMEA
• Carol Stark Managing Director and Renewable Energy Practice Leader, North America

1 Renewable power’s growth is being turbocharged as countries seek to strengthen energy security 2 Massive expansion of renewable power opens door to achieving global triple goal set at COP28 | IEA 3 The Paris Agreement | UN Climate Change 4 ISSB issues inaugural global sustainability disclosure standards 5 Capturing Carbon on the Critical Pathway to Net Zero | Aon 6 Clean Fuel Regulations 7 Minister Wilkinson Announces up to $800 Million in Project Funding to Advance Canada's Clean Fuels Sector 8 Greenhouse Gas Emission Reductions in Canada’s Onshore Oil and Gas Sector. 9 Hydrogen Strategy for Canada 10 European Green Deal 11 Shareholders Demand Greater Climate Transparency | Sierra Club 12 Decarbonizing Your Business: Finding the Right Insurance and Strategy | Aon 13 IEA: Clean energy investment must reach $4.5 trillion per year by 2030 | WEA 14 Insurance Plays a Key Role in Transitioning to a Low Carbon Future | Aon 15 Renewable power’s growth is being turbocharged as countries seek to strengthen energy security 16 How many jobs could the clean energy transition create? 17 Global Green Skills Report 2023 |LinkedIn 18 Cutting Supply Chains: How to Achieve More Reward with Less Risk | Aon

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Online Trade Magazine Alternative Energy from Solar, Wind, Biomass, Fuel Cells and more…

Now is a good time for entrepreneurs to get started in the renewable energy sector. The following best practices will help any business get off the ground.

How to Start a Renewable Energy Business

Emily Folk | Conservation Folks

Growing demand for sustainable energy solutions and the increasing scarcity of fossil fuels have a wide range of consumers — including individuals, businesses and government institutions — more interested than ever in renewable energy.

At the same time, startups in the renewables industry have access to a wide range of new technology and government initiatives designed to encourage investment in clean energy.

Now is a good time for entrepreneurs to get started in the renewable energy sector. The following best practices will help any business get off the ground. 

Start by Knowing Your Niche

Some successful renewable energy companies and startups have a highly specific focus. Others identify opportunities where they can improve access to renewable technology or make existing solutions more cost-efficient.

Solstice, for example, is a renewable energy startup that specializes in helping communities invest in solar energy by bringing together individuals who are interested in the technology but don’t have enough capital to purchase a solar system themselves.

Identifying a specific niche within a sector of the industry — like community-focused solar services — can help make a startup more competitive against well-established renewable energy providers.

Take Advantage of Local Initiatives

Some of the most effective new renewable businesses are able to succeed because they follow industry momentum.

For example, there’s Delfos, the developer of an intelligent maintenance platform for wind turbines. The platform, using specialized smart sensors, gathers data on wind turbine performance and function. The data the platform provides enables turbine owners to improve maintenance practices and tweak operating variables to minimize energy loss.

A business like Delfos is most successful when there are incentives for local governments, businesses and other organizations to spend on renewables.

The Wind Production Tax Credit (PTC), for example, made turbines a much more compelling investment. Right now, this credit is set to expire at the end of 2020. The last time the credit expired, in 2012, new installations of wind power in the U.S. fell from a record 13 gigawatts to none the next year.

While you may not want to be involved in the policy side of your business, familiarity with federal, state and local incentives — as well as private initiatives in your area — will be key to success.

Be Ready for the Major Renewable Energy Hurdles

In addition to the usual challenges of starting a new business, entrepreneurs in the renewable energy industry will face some unique difficulties.

As with the audience of any other sector, customers of renewable energy products and services want benefits and savings over the solutions they’re already using. You’ll be competing both with other businesses in your particular niche as well as the non-renewable solutions your audience currently relies on.

In general, clean energy will be a significant investment. There’s often no real infrastructure to build on, meaning your company will be helping a particular consumer or client develop their home solar system or wind farm from scratch.

For renewable energy businesses, there are ways to cut back on the high cost of installing new clean energy systems. Used construction equipment, for example, can help reduce operating costs , while cost-saving approaches to specific projects — like geothermal loops that take advantage of nearby lakes — may help drive down expenses further.

There’s a growing body of evidence showing that consumers are willing to pay a premium for green products — with younger consumers especially open to markups on sustainable goods and services. There’s also evidence that people are willing to invest heavily in energy systems that require significant upfront investments.

Major names from inside and outside the renewables sector have had major successes in the industry. Tesla even recently increased the price of the company’s solar battery system, the Powerwall, due to rapidly growing demand for home solar tech.

Still, renewables are a niche market at the moment. Even the most committed consumers may be put off by the high initial investments needed for a geothermal heating system or home solar array.

An effective pitch will likely need to demonstrate how your business can provide both reduced emissions and cost savings. Customers will likely be convinced only if you can show them how renewable products can be affordable, or may pay for themselves over time.

How New Renewable Energy Businesses Can Succeed

The continuing green energy boom means that right now is a great time for entrepreneurs and renewable energy experts to start their own business in the sector.

However, despite interest in renewables, any new business is going to face some significant challenges. The cost of buying into renewable systems means any new company will need to know its niche very well, and be ready to make strong arguments about the potential benefits and cost savings of any service it offers.

The content & opinions in this article are the author’s and do not necessarily represent the views of AltEnergyMag

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Starting Your Own Clean Energy Business - What Does It Take?

Diane Cherry is a woman owned small business providing clean energy consulting services for local government, clean energy companies, non-profits and educational institutions. Her projects and...

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• Nov 8, 2022 Nov 8, 2022 6:23 pm GMT

Clean energy project development is an entrepreneurial venture, with significant risks and unknowns, and it requires an immense amount of time and financial resources to complete projects. But individuals are launching their own companies every day, bolstered by clean technology trends. What does it take to start your own renewable energy development company?  This article offers some insight into that question and includes advice from Matt McMonagle, CEO and Founder of NovoHydrogen . Prior to founding NovoHydrogen six months ago, Matt served as the Vice-President at Dimension Renewable Energy and oversaw all the firm’s energy storage projects. He also worked at ForeFront Power and SunEdison.

So you want to launch your own clean energy business, what should you know? Here is a list of the top ten suggestions.

• Make sure you have the right temperament.

Matt talked about the importance of passion in what you do and having an ability to weather uncertainty and ambiguity. “When you start your own company, you must do many different things and often there is not a clear precedent. If that excites you, then great, but if not, you may be better off working for an established company, in a mature market, with clearer responsibilities”. Matt worked for five previous companies – four of them start-ups - so that gave him comfort in understanding the culture, its evolving nature, and the lack of a clear job description.

• Understand the competitive landscape and where you fit. 

Be laser focused on the market and where you show up in the value chain. Matt left Dimension Renewable Energy, a company that develops solar and storage projects. Solar and storage are known technologies and serve more mature markets. Starting a small company focused on solar and energy storage can be harder because large companies operate in these mature markets. Green hydrogen, on the other hand, is not a mature market, especially in the Americas. Matt “could be early but not too early.” In that way, there is less risk.

Hydrogen technology has been around, but has not been cost effective yet. Countries in Europe have been in the field a bit longer, and are a few years ahead of the U.S. in green hydrogen. As a result, Matt felt the timing right to start a green hydrogen company here in the U.S. because the green hydrogen market is new, evolving, entrepreneurial and development is inherently local. 

• Figure out your niche — pivoting from one technology to another should not be considered lightly.

Matt’s ambitions differed from his former company’s path, which gave him more impetus to do his own thing.  That said, moving from energy storage and solar to green hydrogen was not something he considered lightly. He spent many hours researching the green hydrogen market. He notes, when you pivot from one technology to another, it may be even harder because you must bring knowledge and expertise to something unfamiliar. 

• If your niche includes the same business as your current company, understand the non-compete clause.

If you are leaving an established renewable energy company to launch a new firm in the same market/technology, it is important to understand any non-compete clause. One employee leaving to start a new firm may not be controversial but several employees looking to branch out is a common litigation scenario. Non-compete agreements are enforceable if restrictions are reasonable in duration/scope/geography. 

• There is risk in anything you do.

Even though starting a new company is risky and uncertain, Matt noted there is risk in everything – including staying put. An established clean energy company may decide to lay off an entire division, or merge with another firm. Though he knew it would be challenging, Matt decided creating his own path was worth the risk. At worst, he could still get a job elsewhere even if his venture didn’t work. Starting his own green hydrogen company would build marketable skills and allow him to work in a field he was passionate about.  

• Acquire any necessary capital. 

Every business succeeds or fails based on its ability to sustain itself financially, but it could take some time before revenues exceed costs. Although there are several financing options for new businesses and startups, research shows that almost all entrepreneurs invest some personal savings at the early stages of their business.  Some entrepreneurs obtain financing from banks, venture capital, or other development capital providers like Leyline Renewable Capital. The first two options may be harder to obtain in the early stages as they tend to want to see an existing company with strong growth potential before lending money. 

Matt launched his firm without any other co-founders and had enough money committed from investors that he felt comfortable taking the leap. Beginning a firm on your own versus with others is a choice to weigh carefully. For some, starting up alone is easiest. However, it may pose challenges when it comes to gaining investors, if the investor isn’t willing to risk it all on one person.

• Hiring people in a small company is hard.

Matt started his company without another co-founder. He knew that he had to hire staff immediately but noted that finding the right people in a small company is crucial. But it is a two-way street: while he is hiring for the company, that person is also taking a chance on him. Wrong decisions are costly.

• There is more development capital today than ever before.

There is much more development capital available for companies today than there was 3-4 years ago across all different stages of development. The good news is that it is easier to get money from lenders, which makes starting a company less stressful than in the past. When capital is committed and mentors are available to guide you, this is one less thing to worry about.

• In the end, betting on yourself is worth it.

Matt said it was a “no-brainer” to start his company and in retrospect, he would have regretted it if he didn’t take the plunge. In the end, everything is in flux, and you must evaluate what is right for you. Betting on himself, Matt said, was well worth it. 

     10. Be willing to accept help and leverage your network. 

No one person or company can do everything on their own. Check your ego at the door and take advantage of help that others are willing to provide. Matt credits a big part of his conviction to start NovoHydrogen to the amazing mentors, leaders, and bosses he has worked for and with throughout his career. They have shown him how this is done and remain trusted advisors.

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