The taste for renewable energy has blossomed in recent years, leading to what Fortune have found is an 18% share of the United States’ total energy production.
What the industry is lacking is a clear business taste. Europe have shown the converse, with an organically grown renewable energy market that’s home to dozens of unsubsidized businesses.
American businesses should perhaps rethink and look into developing their renewable energy.
Despite a lack of federal appetite for renewables, the United States presents a relatively easy market for new renewable businesses.
What’s more, current trends show such a business can be very profitable.
Establishing a Renewable Energy Business
While the overarching energy ‘culture’ of the USA does not lend itself to renewable businesses springing up purely from a profitability perspective, there are plenty of incentives to encourage new business.
Despite a 56% drop on the previous year, the Department of Energy issued $5.6bn in renewable energy tax breaks to the end of 2016, according to the most recently available data. Equally large sums have been issued by states but are not accurately recorded.
Furthermore, private business is statistically more likely to lend – and at a better rate – for new renewable business.
According to Energy Sage, renewable equipment costs dropped 6.5% last year; with lower initial capital required, loans are on the up with $2.2tn issued in September 2018 alone.
This makes it relatively easy for renewable businesses to get access to new funds and get up and running.
Is There Profitability in the Renewable Energy Sector?
The subsidies available at federal and state level with provide most renewable businesses with a slight advantage over many other sectors, if not fossil fuels.
Whether the business remains profitable is another question, however. A report by Forbes suggests that they are, and will continue to advance profits further with technological research.
Their survey of 800 industry figures found that 71% thought renewables will become more profitable.
A similar report by the business magazine showed success stories, with some companies reporting 200% stock market growth over the past two years.
Perhaps one of the most telling indicators that renewables are profitable, and that they will continue to grow, is from the attitude of the energy industry’s big players.
CNBC recently interview Bob Dudley, CEO of oil giant BP, who said their renewable projects are profitable and will become even more profitable in years to come.
This is a view that has been echoed by peers including Shell, ExxonMobil and Chevron.
Shell and other major oil companies on the planet seems to have understood that the switch from fossil fuels to renewable energy it is inevitable, so they’ve decided to reduce the investments in coal-fired power stations and increase the funds to create renewable energy assets by 2020.
If major oil companies are slowly deciding to move from the coal and oil era to the clean energy era, the future migh become greener even faster than we’ve expected.
Conclusion
The renewable energy industry has labored under the myth that it is not profitable. However, recent developments have shown it to be the opposite.
As technology improves, the industry will improve too.
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