13 Aug The Go-Green Initiative and Its Impact on the Retail Energy Industry
By Ian Palao
We have no clue what color ‘the new black’ in the fashion industry is, but green is the new gold in the energy world. The ripples that have been taking place in our industry over the years has turned into tsunami of change. And with change, comes opportunity.
Consumers have led this change. Younger adults, especially families with kids in the home, are much more conscious about protecting the world’s resources and environment. Residents are adding their own renewable energy sources to their properties and are giving greater priority to renewable sources in states with retail choice.
The private sector has now caught up and is leading the way with many of the world’s largest companies promising to use 100% renewable energy within the next 5 to 10 years, from tech companies like Facebook and Philips to established traditional companies like Walmart and Anheuser-Busch InBev. Many companies have already achieved 100% renewable energy consumption, including Apple, Google, Microsoft and Wells-Fargo. Some companies are even supporting and financing the green efforts of their partners and suppliers.
And, naturally (no pun intended), states are mandating percentages of renewable energy production and many municipalities are committed to going 100% green. Cooperatives are no exception. Kit Carson Cooperative in northern New Mexico has a goal of 100% daytime solar by 2022 and are currently 33% of the way there.
This sea change has created an opportunity for energy retailers who aren’t afraid of change. However, with opportunity comes risk. You can’t just hit a magical green button and continue like it’s business as usual. The upswing in demand for green energy has attracted an onslaught market participants and expansions of product offerings. The result has created a more complex and competitive environment with greater margin pressure.
Ask yourself how well your company can accomplish the following:
- Forecast renewable generation in matching hedged supply to your traditional forecast load.
- Add weather factors brought to your forecast equation such as wind, sunshine, water levels, precipitation and /or snowfall.
- Greater exposure to the real time market, as a result of the variability with weather conditions and generation output, causes increased volatility with real time pricing.
- Analyze data with greater granularity, breaking down the hourly forecast 8,760 to fifteen minute 35,040, and then to five minute or 105,120 data points of granularity measurements.
- ISONE projects that with the addition of more solar generation, the most volatile (pricewise) period will likely shift from afternoon to the early evening.
A successful green future requires vision.
Vision is enabled by new tools with greater reporting functionality than what spreadsheets can provide. If you haven’t already, it’s time to ween yourself from a spreadsheet mindset and look for software tools that provide insights and analytics for making green-informed decisions. Spend less time aggregating and more time decision-making over things like:
- Clustering of forecast models on the meter level
- Consistent monitoring and speed reporting associated with the volume-price exposure towards the DAM and RT markets
- Faster settlement reconciliation
- The burden of REC tracking and reporting to avoid the ever-growing penalties
- The many new REC trading platforms and exchange markets being built
Another important element is to have an authentic respect for green energy, if not a full-out love for it. It’s the way of the not-so-distant future. It’s hard to embrace change if you don’t want change. If you don’t have a deep-seated desire to grow your business, then articles like this will be of little use.
To quote John C. Maxwell, “Change is inevitable. Growth is optional.” To grow wisely, you’ll need a new attitude and new tools.
Ian Palao, VP, Strategic Energy Services at POWWR®