Renewable energy and energy transition help make companies competitive

Recent U.S. legislative, regulatory, and technology developments have led to significant investment in energy efficiency and renewable energy technologies. Beyond environmental stewardship, these areas offer potential cost-saving and self-reliance opportunities for businesses willing to invest in them now.

Reaching these renewable energy goals before competitors could better position your organization for the future. Here are some ideas on how to get started.

Climate finance and clean energy outlook

The U.S. government has enacted legislation to provide businesses with tax incentives for green capital expenditure projects, including through the Infrastructure Investment and Jobs Act and the Inflation Reduction Act of 2022.

“Recent government support is offering industries greater clarity regarding the return on these investments,” says Elliott.

Climate finance refers to financing that supports activities to reduce emissions or adapt to climate change. Climate finance investment support is an important consideration for corporate entities seeking to make large-scale changes to their energy consumption and generation. Climate finance may also help offset the hefty price tag carried by projects with extended returns on investment.

Begin with energy efficiency

First, consider how your organization can reduce its power consumption. Consider partnering with a consultant to conduct an energy audit to understand your operational energy needs. This audit typically includes an energy model to assist with calculating savings and determining what options are viable for your business. Use this audit as a roadmap to help define your company’s energy efficiency strategy.

The most immediate, viable strategy may be to retrofit your existing building stock with energy-efficient technologies, including LED lighting, ENERGY STAR-certified HVAC equipment, and energy-conserving building envelope upgrades. These areas are part of routine maintenance, and these upgrades could increase property values and lower energy costs.

Investing in electric vehicles (EV) and charging infrastructure helps eliminate engine exhaust emissions and significantly reduce emissions from brakes. Commercial and personal electric vehicles are gaining popularity, so investing in charging stations can better position your company to replace and expand its fleet as EV costs decrease.

Securing financing for energy-efficient commercial projects is easier now than in previous years, says Elliott. Companies could also receive tax deductions and credits for these investments. Commercial buildings that demonstrate a 50% reduction in energy usage through improvements to heating, cooling, ventilation, hot water, and interior lighting systems could be eligible to receive a tax deduction^†. Companies that purchase EV vehicles and charging stations are generally eligible for tax credits, helping make them an affordable option^‡.

These investments can be stepping stones to reducing power consumption and becoming more efficient. The next step is to consider investing in renewable energy technologies to produce the power you need.

Invest in renewable energy technologies

According to the U.S. Energy Information Administration, production and consumption of renewable energies reached an all-time high in 2021. Renewable resources are expected to provide 22% of U.S. energy generation by the end of 2022 and 24% in 2023, up from 20% in 2021^§.

The upward trend of renewables reflects the U.S. government's goal to cut greenhouse gas emissions in half by 2030^¶. Investing in renewable resources now can provide considerable savings and opportunities for your organization.

For example, the U.S. government incentivizes businesses to switch to solar energy through its solar investment tax credit. Qualifying organizations can currently claim this corporate income tax credit for 30% of the cost of a solar photovoltaic (PV) system in the tax year it is put in service^≠.

Your organization may be able to use solar photovoltaic technology to produce all the energy it needs – and often beyond. Even if you don’t entirely rely on renewable energy, you may be able to realize cost savings by reducing your bill from traditional sources. Wind turbines, hydropower, and other sustainable energy sources may offer similar benefits. Greater self-sufficiency in power generation may also result in more predictable energy costs and a more reliable energy supply by reducing exposure to energy market price swings and potentially unstable grid infrastructure.

Pursue your goals one step at a time

Decisions made today to invest in these initiatives could give your organization a competitive advantage over peers that fall behind. While pursuing these goals might seem daunting, you can start with small steps – becoming more energy efficient – and work toward building further reliance on renewable energy sources. Finding a strong financial partner to provide financing along the way will be a key to success.

"Most climate finance projects require a significant amount of time to implement, as they’re often related to infrastructure," says Elliott. “Having an experienced financial partner to help navigate the project process can offer greater efficiency and help reduce risk.”

To learn how Huntington can assist with climate finance products and financing for your organization, reach out to your relationship manager.