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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