In addition to the numerous paths you can take to obtain traditional energy (aka, “brown power”), there are a host of renewable energy options and design solutions that can help meet your goals and exceed your expectations. The key is to find an energy advisor who has the experience and expertise to help you navigate all of these considerations to create a smart energy solution for your business.

From purchasing renewable energy credits (REC’s) to installing an independent, onsite solar power system, you have many options for customizing your energy.

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Be sure to talk to your trusted renewable energy advisor about these three considerations to ensure you’re getting the best deal to support your green goals (both the cash and eco kind).

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Consideration 1: On-Site v.s. Off-Site Solar

Thanks to major advances in technology that have made solar power more applicable and accessible to businesses, solar power is no longer a one-size-fits-all solution. Rather, you have the option of choosing to procure energy from off-site sources such as through paper transactions or to build an on-site system.

There are four main options for going green that give you the freedom and flexibility to find the smartest strategy for your unique situation:

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On-Site Solar

• Power Purchase Agreements (PPAs) – A great option for businesses that can’t afford the large lump sum investment of building their own solar power system, a PPA is an arrangement in which a developer builds the solar system on a business’s property free of charge and then “sells the power generated to the host customer at a fixed rate that is typically lower than the local utility’s retail rate.”
• Solar Acquisition – Occurs when a consumer purchases a behind-the-meter solar array, such as when a business purchases their own photovoltaic system and remains grid-tied in order to engage in net metering.

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Off-Site Solar

• Renewable Energy Credits (RECs) – According to the EPA, “RECs are issued when one megawatt-hour (MWh) of electricity is generated and delivered to the electricity grid from a renewable energy resource.” The value of the credit is determined by several factors, including the facility location, system build date, and emissions rate.  RECs can be procured on your behalf to “green-up” current or future “brown power” contracts.
• Retail Electric Provider (REP) Products – REPs are energy providers that use the local utility company to deliver the electricity they generate to their customers. They often provide better rates and service than public utility companies and offer various renewable products.  These products may contain a percentage of renewable power or be entirely green.

When considering onsite options like a PPA or Solar Acquisition, an important factor is the amount of space available for either a ground, roof, or covered parking installation. While most people assume a solar power system – also known as a photovoltaic or PV system –  has to be installed on a roof, ground mount installations can be more cost-effective and produce more power.  Similarly, a carport array is an environmentally friendly way to get covered parking (which is a fantastic employee benefit) and may be tax-deductible!!

As the renewable energy market becomes more diverse, it’s critical to consult with a trusted energy advisor about which method maximizes value for your business.

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Consideration 2: Renewable Energy Financing

Another common misconception is that in order to take advantage of renewable energy sources, you need to buy a PV system outright. However, there are several options for financing your renewable energy initiative.

Before shrugging renewable energy aside because you don’t have the cash to throw at a new PV system, consider opting for a solar PPA or lease. Each comes with a different set of liabilities, upfront costs, and tax benefits.

With a PPA or lease, the owner of the system can take advantage of tax equity savings for exempt organizations like schools and potentially pass on some of the earned value on to the buyer (you!). Another benefit of PPAs and lease agreements is that the liability of the equipment lies with the official owner, which is one less thing you have to worry about as you run your business.

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Consideration 3: Location

A third common misconception is that if you opt for purchasing renewable energy credits, you must buy them from within your state. However, that’s not necessarily the case.

Ultimately, the decision comes down to how “green” you want to get. For example, in Texas, wind-generated energy is usually the cheapest and will likely continue to get cheaper since policymakers are working to get rid of the renewable requirement statewide.

Similarly, Texas has the largest wind capacity in the nation and is continuing to grow its wind-generated energy volume (which is why it’s not uncommon to see massive wind turbine blades rolling down the freeway on flatbed trucks!).  According to the U.S. Energy Department, “in 2017, wind-generated about 15 percent of the electricity in Texas, up from less than 13 percent in 2016.”

The price and benefits that come with your choice of renewable energy sources depend on where that energy was generated and how it travels to reach your light switch.

If you’re considering making the green switch to renewable energy, consult with a trusted energy advisor first. There are numerous factors involved that an expert can help you navigate to make the smartest choice.

By working with a trusted energy advisor, commercial energy consumers can take advantage of 4CP alerts, shed load (aka “peak shave”), and lower demand when peaks are recorded.

Here’s what you need to know about 4CP and how to maximize your benefit during the highest-stress period of the energy calendar.

What is 4CP?

Four Coincident Peak, otherwise known as 4CP,  is a program that allows commercial business participants to voluntarily reduce their energy consumption during the 15-minute intervals in the highest-demand part of the year: June, July, August, and September when ERCOT is likely to record peak events.

The voluntary program lets you reduce charges from your TDSP (transmission distribution service provider) by reducing electricity usage during peak events throughout the summer. The result is a significant reduction in energy expenses, which can lead to major sighs of relief for bill payers.

During the summer months, The Electric Reliability Council of Texas (ERCOT) measures four coincidental peaks. The energy usage measured at those peak times will be a key factor in determining your TDSP charges for the following year.

As you can imagine, if the peak measurements are exceptionally high (like on a day when Texas’s notorious weather reaches into the triple digits) your rates may be locked in at above-average costs for a year after the fact!

Those who ignore 4CP or simply chalk the summer month’s sky-high expenses up to an unavoidable cost are missing out on serious savings opportunities.

What is 4CP Avoidance?

Four Coincident Peak avoidance is the act of reducing energy consumption during specific time periods in the summer in order to reduce costs of transmission charges. Participants in the 4CP program often have a strategy to limit their energy use during these time periods.

Understanding 4CP charges is a material method to cutting energy costs. Strategically reducing your energy load during the time at which 4CP is measured will create a lower multiplier for the transmission cost recovery factor (TCRF), which directly impacts your transmission distribution service-related charges on your bills (also referred to as demand charges). The key is to know the right days and the right times on those right days to make the cut.

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An avoidance strategy makes use of 4CP alerts. A trusted energy advisor will have access to these alerts and help create a strategy that helps you gauge the best time to curtail consumption.

According to the Frontier Association, “A consumer that can reduce its demand for electricity by 1 MW during each of the four CPs can save about $25,000 in transmission charges the following year… This potential avoidance of transmission charges provides a strong incentive for industrial energy consumers with some flexibility in their operations to engage in ‘4CP chasing.'”

How to Reduce Consumption During 4CP?

Most businesses assume that there’s no way to reduce their energy consumption. Energy-conscious businesses in particular may believe that they’ve already implemented as many cost-cutting strategies as they can.

However, there are numerous creative ways to lower energy usage at the most opportune moment that cost far less than the charges you’ll accrue if you ignore the opportunity for a 4CP Avoidance Strategy.

There are countless strategies you can use, including:

• Reducing non-essential lighting
• Modifying manufacturing processes
• Alter scheduled maintenance periods
• Coordinate shift changes
• Adjusting HVAC equipment
• Dialing back pumps
• Changing settings in industrial freezers
• Reduce or halt use of non-critical loads
• Automated response solutions

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There’s no one-size-fits-all when it comes to finding the ideal way to take advantage of 4CP alerts, so consider which operations are placing the biggest demand on your energy consumption and think outside the box to make the smartest play for your business.

How Can Renewable Energy Help During 4CP?

Additionally, if you want to take advantage of going solar and maximizing your solar investment tax credit, now may be a perfect time. Using renewable energy to offset your energy use during 4CP can be the ideal win-win strategy for many businesses.  The nature of solar energy inherently creates a “peak-shaving” effect since a solar array is producing at its max on sunny (and likely HOT!) afternoons when the grid is peaking.  This means, your business is drawing less energy from the grid through these critical time frames.

Not only will you cash in on the maximum Federal ITC in 2019, but also you’ll save for the entire year to come by reducing your usage during the peak measurements from June through September.

All of these methods – and others that can be customized for your business – can have a dramatic effect on energy consumption without hindering your operation. In fact, some may even improve your operational efficiency in the long run as well as bolster your 4CP strategy.

Ready to design your own 4CP Avoidance Strategy to alleviate stress on your business? Find out more and get a free energy assessment from a trusted energy advisor today.

In January 2019, ERCOT was notified of yet another coal plant closure. While it may seem like “business as usual” as the nation is in an uproar about all things “green,” each new coal plant closure pushes the energy market further toward unpredictability and chaos. We’re all left wondering: are alternative energy sources a viable option yet?

Or do they still have a ways to go before they’ll be able to support the infrastructure that has been built on a heavy reliance on coal?

The Beginning of the End for Coal

2017 marked the beginning of the long, arduous end for the coal industry. On average, one coal plant was closed every 15 days throughout 2017.  A total of 27 plants were slotted for either closure or conversion.

In 2018, there were twenty coal plant closures.  Texas took a large brunt of the change with Vistra closing four plants around the state.

Now, just a few short months into 2019, we’re seeing the trend continue and even increase. From 2019 to 2024, the United States is expected to retire coal plants contributing a total of 23.1 gigawatts of energy, according to the Institute for Energy Economics and Financial Analysis.

Yet the U.S. is still left with 245.6 gigawatts of coal plant operating capacity that have yet to be included in planned retirements or conversions. However, experts are saying it’s just a matter of time.

A Market Fired Up

With each new closure announcement, the costs of electricity within the Texas market went up. Once the closures were actually approved and a concrete plan was in place, prices hiked even more.

As the news of the latest ERCOT-tied coal plant retirement hit the market, some took the closure as a sign that the U.S. may be embracing alternative energy sources. Others, though, are not so sure.

According to DeAnn Walker, chairman of the Public Utility Commission, the decrease of ERCOT’s power reserve margin from 8.1 percent to 7.4 percent is “very scary.” The market prices reflect Walker’s sentiment. August energy prices are trading at about 60 percent more than summer 2018’s peak prices.

Not only are prices increasing, but also peak load is increasing and breaking previous records.

In 2018, upon each approval of the coal retirements, the market continued to trend up in price the first part of the year. The energy market grappled with increased volatility based on concerns around shrinking reserve margins.

Reserve Margins: A Hail Mary

Reserve margins are a bit of a smokescreen and are truly a last-ditch effort to cover the spikes in energy demand. Specifically, reserve margins are amounts of excess electricity that are produced above demand that can be used to prevent brownouts and blackouts. The number of available reserve margins are calculated by subtracting the energy demand from the energy capacity.

As each new coal plant closes, the energy production capacity of the market drops.‍

While ERCOT has a goal reserve margin of 13.75 percent, the anticipated reserve margin for summer 2019 is expected to be 8.1 percent, according to ERCOT’s most recent Capacity, Demand and Reserves Report.

Following the release of ERCOT’s report, Texas Municipal Power Agency (TMPA) announced the closure of the Gibbons Creek coal plant north of Houston, which would drop the forecasted reserves to about 7 percent.

Supply Is Failing Demand

The electricity demand in Texas has been shockingly high for the last two years. While the state is growing faster than the national average and experiencing increased demand, there are concerns that energy production will not be able to keep up.

Unfortunately, the supply-demand relationship has been out of balance for a considerable amount of time.  While Texans have enjoyed the resulting lower energy costs, a market the relies on price to incentivize generation is coming up short on new power assets.

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To compensate and catch up with the drastic changes in the energy market, prices will be forced to rise… and soon.

Alternative Energy Sources Offer Relief + Freedom

To counterbalance the increased demand for energy as temperatures and populations rise in Texas, our energy use will need to match the sources of energy generation.

Renewable resources can offer relief to businesses financially while also providing stability of resources. Several businesses are employing alternative energy sources by making use of energy storage to reduce grid-dependency or by establishing microgrids to make businesses completely grid-independent.

Rather than feeling intimidated by the concept of “going solar,” now’s the time to make a strategic move to decrease your dependence on the unsteady and highly unpredictable coal-fueled energy market. Working with a trusted energy advisor can help you figure out the best strategy for your business.

Whether you’d be best served by hedging long-term fixed energy prices or making use of a managed index product with seasonal hedges, your business’s bottom line with thank you for years to come for taking action when the time is right.

The best way to protect yourself from the ever-fluctuating state of coal-derived/grid power is to be well-informed, detail your clear action points, and identify measurable metrics to please stakeholders.

Have questions? Leave a comment below or reach out to get one-on-one advice from a trusted energy advisor!