In the Wake of Climate Change, the Energy Cloud Vision Is Good for Business

On Black Friday, while many Americans were boosting retailers’ balance sheets, the US government released a report highlighting the dangers that climate change poses to the country’s economy. Volume 2 of the Fourth National Climate Assessment (NCA4), put forth by the US Global Change Research Program, finds that more than 10% of US GDP is at risk due to rising temperatures. The report finds that global temperatures are on track to increase by 1.1°F by 2100, even if global emissions drop to zero. In this best-case scenario, billions of dollars are expected to be lost through reduced agricultural yields, increasing health costs, and extreme weather events.

Businesses do not appear to be surrendering to the predicted financial burden without a fight. Instead, they are embracing a transition to Guidehouse’s Energy Cloud vision, a clean, distributed energy system. Guidehouse Insights studies show that corporations are embracing technological solutions to reduce fossil fuel use and corresponding greenhouse gas emissions.

The Business Case for Clean, Distributed Energy

As energy systems are increasingly strained during high temperature days and severe weather events, companies see investing in distributed energy resources (DER) as tools to protect their business. More and more, corporations are driving the demand for renewable energy by entering into voluntary power purchase agreements, fueling their supply chains with certified 100% renewable energy, and developing renewable energy installations onsite.

While harvesting renewable power sources is a critical means by which to help ensure power reliability, companies are also recognizing the paybacks from reduced energy demand. According to the Federal Energy Regulatory Commission’s 2018 Assessment of Demand Response and Advanced Metering, nationwide enrollment in demand response programs has increased since 2013, particularly in areas where time-of-use rates are being entertained. This could cause an increase in the price of electricity during periods of high demand.

Further, corporations are investing in sizable energy efficiency projects in their commercial spaces. According to many voluntary self-reports to the Climate Disclosure Project, companies predict that the long-term payouts of efficiency projects will be higher than their initial costs. Across the board, corporate leaders are jumping on opportunities to generate sustainable power and increase their energy productivity. Rather than fearing the scenarios described in this year’s NCA4 report, companies are turning impending danger into opportunity.

As Threats Intensify, Creativity Grows

The contents of the NCA4 are similar to other 2018 global climate reports. Corporations embracing renewable energy is not unheard of either. While increasing emissions-free localized power generation is critical to maintaining the US economy, creative developments in the commercial demand-side management space are likely to continue to unfold. Guidehouse Insights has been following demand-side management and DER strategies in recent years and looks forward to further exploring and forecasting these trends in 2019. Energy efficiency, demand response, and other load-shifting or curtailment programs are likely to proliferate in the coming year as companies look to reduce their contributions to climate change and defend themselves against its negative economic impacts.