Globally, in 2008, more than $120 billion was spent on renewable energy technology. These expenditures did not include research and development costs or spending by local businesses to install renewable energy systems to reduce their own energy costs. As state legislations have begun to mandate the levels of renewable energy that a business must use or a utility must generate – and as billions of dollars have become available to fund these renewable programs and initiatives – businesses are more pressed than ever to successfully position themselves to share in this growing economic segment.

The availability of reliable renewable energy often de­pends on the climate and topography of the region. For instance, wind farms are starting to pop up in many coastal areas to take advantage of the prevailing ocean winds, while photovoltaic power stations are conveniently located in many desert environments. Regions are utilizing renewable energy systems that best fit their specific weather patterns and topographies.

Determining which type of system is appropriate for your business will be based on the available technology suited for your environment. Whether you are looking to expand into the renewable energy industry or save energy costs through incorporating renewable energy into your business plan, renewable energy has become an important part of long-term strategic planning.

Entering the Business
Getting into the renewable energy business requires an evaluation of a company’s current business model and product lines. The evaluation should focus on the long-term business plan and should consider the current economic shift toward renewable energy and a green economy. This shift is being fueled by rising energy costs, legislation and demand.

The business strategy for integrating renewable energy falls into two basic categories:

• Retooling your business to develop, manufacture or in­stall re­newable energy technology, and
  
• Incorporating renewable energy systems into your business to reduce your over­all energy costs.
  

Companies that have sought to retool include those that design and manufacture photovoltaic cells and architects who design energy-efficient buildings or fit-outs. In one situation, a business expanded its HVAC unit’s installation business and retooled the work force to install solar panel systems on residential buildings.

Key questions to ask include:

• What costs will the business incur to refit the plant or facilities to make renewable energy products?
• Can the business’s current work force be trained to be productive in a new product line? 
• Will the cost of retooling generate better profit margins? 
• Will starting this new operation strategically position the business for the future? 
• What government and industry incentives are available to reduce the startup costs? 
• How much of the new technology does management need to understand?
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In retooling a work force, there are layers of skills that are in­volved in the renewable energy business. Clearly, a strong un­derstanding of the ener­gy systems is needed to design new systems.

The fundamental skills used in most manufacturing operations will remain the same in the renewable energy industry. For example, in Ohio, some of the old abandoned factories are being converted to produce electric cars. As with any technological change, the work force can be re­trained to be productive in a new business line. Re­tooling the work force today is analogous to the auto industry re­tooling its work force each time new technology is created. With­out continuous retraining, an auto worker of the 1980s would not be able to build or repair many of the cars we drive today.

To help businesses move toward a green economy and develop renewable energy, all levels of government are providing grants or tax incentives to use or produce renewable energy systems. One example is the 30 percent credit the federal government will give to a business that installs solar power systems.

As the Cash for Clunkers program did for the auto industry, this credit is expected to fuel demand for solar panels, thereby creating an opportunity to in­crease panel sales. Further­more, uti­lity companies in many states are being mandated by statute to generate a portion of their energy from renewable sources. This has placed pressure on the utilities to purchase renewable energy from the private sector in the form of renewable ener­gy certificates.

Utilizing Renewables
Almost all products that use energy to function can utilize renewable energy. Think of the manufacturer that pro­cesses byproducts and turns them into a biofuel that is used to run a generator, or the restaurant that takes its grease and waste and converts them to biofuel to power its ovens or refrigerators.

With the rising cost of energy, businesses need to look at sustainable systems that will reduce their long-term energy costs.

In the current economy, re­ducing or controlling costs will have a positive ef­fect on the company’s bottom line. Util­izing re­new­able en­ergy also shows the local community that the business is operating as a responsible neighbor.

Considering the environmental issues associated with fossil fuels and their dwindling supply, alternative fuels are being developed and incorporated into many businesses. One of the most viable forms of re­newable energy is wood or other biomass fuels. Businesses can use alternative fuels to operate many of their off-road vehicles. Distribution centers commonly use propane to operate their forklifts. Many municipalities use natural gas to operate their bus lines. Businesses should evaluate their bio-waste to determine if there is a cost-effective way to reuse the waste to create energy for operating the equipment in their offices or  manufacturing plants.

The savings from the use of renewable energy sources is self-evi­dent. If a company is utilizing the sun, wind, geothermal heat and water that exist freely in nature, then the ongoing cost is limited to how much it will cost to maintain the system. In preparing or reviewing renewable energy system projections, the cost of purchasing and installing the system is re­couped by most companies in three to five years, depending on the type of system and the amount of kilowatts that can be generated.

It is unclear how long tax and other government incentives will be available. The renewable energy industry is just starting to develop, and the available technology is constantly changing and improving. What was thought to be cost-prohibitive or inefficient just a few years ago is now a viable alter­native to conventional energy sources. Business owners will realize the value in incorporating re­newable energy into their long-term business plan and retool their business to fit into the renewable energy world.