How Businesses Can Accelerate the Renewable Energy Transition

Europe’s ongoing energy crisis is shaping how businesses are setting and accomplishing climate goals in advance of COP27 this year. New challenges emerged for business leaders as the demand for oil and natural gas skyrocketed this winter and continues to exceed supply in Europe. Besides geopolitical affairs, the energy shortages and rising inflation across Europe illustrate the volatility of fossil fuels and the pace at which renewable energy is scaling.

"I think the challenge we have in Europe is that while countries have agreed on the energy transition, they have not invested enough in the electrification of energy uses," said Maria Mendiluce, CEO of We Mean Business Coalition in a recent interview with TriplePundit. Mendiluce explained to 3p that the electrification of energy uses includes increasing international connections and the storage of global technology.

Predictable costs can prevent market volatility

Renewable energy is the better alternative to fossil fuels and the solution for Europe’s energy crisis, according to Mendiluce. This is because renewable resources like solar, wind and hydropower are primarily fixed costs which makes its prices predictable. And this avoids high volatility in both the building heating and electricity market.

In addition to contributing to market predictability, renewables are cost effective. Levelized costs can help evaluate the revenue required to develop and build an energy generator over a period. And this metric measurement is lower for renewable energy technology than fossil fuels.

Based on financial performance, renewables are clearly beneficial. Despite Europe’s increasing climate ambition, its electricity is comprised of 20 percent wind and solar resources and 13 percent of hydropower. So, what is preventing the acceleration of renewable energy projects?

The challenges of bringing renewable energy to consumers

There are various challenges such as slow permits and long-term predictability that businesses face when bringing renewables to consumers, according to Mendiluce. She pointed out to 3p that progress will also be dictated by how fast policy makers and local and national government create policies to introduce renewable energy to different sectors. In addition to policy, infrastructure and storage capacity is another area for development and investment for governments.

The renewable energy transition does come with challenges. Developing clean energy systems in Europe requires analyzing weather hazards on existing infrastructure, international tensions, and energy demand, amongst other factors. However, these challenges can be overcome with a synergistic approach. For example, governments can develop policies and regulations, provide financial resources and implement incentives for transition-aligned action. On the other hand, businesses can design and implement the infrastructure needed for clean energy systems.

How businesses are responding: strategic thinking and goals

When observing business and policy within the workings of We Mean Business Coalition, Mendiluce is seeing businesses focus on commitment, reducing emissions, investing in nature and consistency. She explained to 3p that businesses that commit to climate goals need to quickly move to action. This can happen in operations or in the value chain. Mendiluce also pointed out that while businesses understand the need to preserve nature, in pursuance of reducing emissions, investment in nature doesn’t replace their own decarbonization. And this is exceptionally important for businesses when establishing trust.

Collaboration and reporting progress for European states and businesses are tools that enforce consistency in climate action. From Mendiluce’s perspective, renewables need to be deployed at a massive scale. To advance the renewable energy transition, she explained that collaboration between states is crucial. "Because of the intermittency of renewables, they will create international connections and will help and mitigate some of the viability of the resources,” said Mendiluce. This joined effort will commit multiple players to the transition to clean energy and advance solutions to any problems that arise.

Mendiluce points to how Gucci and the Italian international bank, Intesa Sanpaolo, have continued an ongoing collaboration and even its recently expanded their partnership as an example of working closely together across value chain. Initially, Gucci partnered with Intesa Sanpaolo to provide preferential loans to small and mid-sized enterprises (SMEs) that report progress aligned with sustainability. Now, the collaboration has expanded to focus on the transition of business supply chains towards more responsible and sustainable processes.

COP27 may be months away but governments and businesses must start acting now. Europe’s energy crisis points to the complexity of international connections, the building of infrastructure and the supply chain. These are undeniable issues that influence the pace of the renewable energy transition, the pace of which must be accelerated.

Image credit: Tom Fisk via Pexels