Russia’s invasion of Ukraine has shattered peace in Europe and led to record instability for energy markets and businesses.
TL;DR
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Events in Ukraine show why over-reliance on fossil fuels is a financial risk during times of global instability.
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Businesses that adopt cleantech solutions sidestep rising oil and natural gas prices, and higher emissions from coal power.
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Accelerating your cleantech transition gives you more protection from market shocks as well as lower energy costs.
We are all aware of the terrible human cost of this conflict, but events in Russia and Ukraine have also impacted businesses around the world, putting the COVID-19 economic recovery at risk. Companies that rely on fossil fuels are exposed to greater instability and uncertainty.
On the other hand, companies leveraging renewables, such as wind and solar energy, are more insulated from price shocks from the oil and gas industry.
Firms that move fast to transition their energy program will minimize their energy costs and risks. Is your company feeling the fallout from the conflict between Russia and Ukraine?
Conflict in Ukraine leading to energy price spikes
Conflicts create volatility in the oil and gas market, especially when they involve major oil and gas producers such as Russia.
Oil surged past $130 per barrel on March 6th, — the highest price since the 2008 financial crisis — in what was the most volatile trading week since 1988.
Brenda Schaffer, Senior Advisor for Energy at the Foundation for the Defense of Democracies explains that “we’re in unknown territory if you pull 13 to 15 percent of global oil out of the pool.”
As such, the conflict between Russia and Ukraine provides a potent reminder of why it’s vital to accelerate investment in renewables. As a result, investors are looking to cleantech as a safe bet in these troubled times.
For example, Sunrun Inc. — the largest residential solar company in the U.S. — saw its shares rise by 13 percent early in the conflict. Similarly, Sunnova Energy International saw a 14 percent rise. Global leaders in wind power — Orsted, Vestas, Siemens — all experienced gains of over 10 percent.
Meanwhile, markets quickly shunned oil and gas exports from Russia even before most sanctions were announced.
Rising natural gas prices could increase emissions
Meanwhile, natural gas prices are rising too, a trend that began before the war. In March, gas prices hit levels — over $5 per metric million British thermal units (MMBtu) — not seen since Russia’s 2014 annexation of Crimea.
This means electricity generation is becoming more expensive for natural gas facilities.
U.S. energy generator and distributor AES Corp’s CEO Andrés Gluski said the company might benefit from higher prices because it has “much more hydropower, renewables and even coal” than oil or natural gas.
Businesses can’t plan around such volatility — they need to move fast to navigate this energy crisis.
The inclusion of coal is interesting, because spikes in natural gas prices make both coal and renewables more competitive. In the U.S., coal is often in direct competition with natural gas in dispatching decisions.
Coal prices catapulted from $130 per tonne at the beginning of 2022 to over $400 per tonne by early March. Despite this, coal is still now cost-competitive with natural gas for the first time in years.
And when utilities dispatch more coal, businesses risk higher carbon taxes and offset payments. It also undermines their efforts to reduce emissions and offer sustainable products and services.
As a result, companies that transition to clean energy sidestep higher prices, and the environmental costs of fossil fuels filling the gap.
The bottom line is simple: fossil fuel prices continue to be extremely volatile. Businesses can’t plan around such volatility — they need to move fast to navigate this energy crisis.
Businesses struggle to implement cleantech
The problem facing many businesses is that adopting cleantech can be a lengthy and costly process.
Right now, businesses spend years searching for enough funding, or waiting to secure better financing terms. In the meantime, they fall behind their more proactive competitors and lose out on substantial savings.
Even firms that have collected enough capital to move forward often hesitate, as competing solutions are hard to differentiate between. And fears over whether projected savings will actually materialize often stall these decisions.
Monitoring asset performance and tracking savings also creates additional administrative headaches. This is especially true for small-and-medium enterprises (SMEs) which often don’t have the resources to employ dedicated energy managers.
Ironically, these lost savings could have paid for your chosen cleantech solution several times over.
Funding barriers, fears, and headaches all stymie cleantech projects exactly when they are most needed. For solution providers, this means fewer sales, more stalled projects, and too much time spent trying to convince customers to commit their capital.
Business-as-usual means solution providers face an uphill battle. Specifically, solution providers have to constantly work to overcome the perception that their solutions represent added expenses, rather than net savings.
In other words, customers too often can’t see the forest for the trees, that is: looking past the cost of transitioning their energy, to the greater savings beyond.
When it comes to cleantech, the cost of waiting (e.g., rising interest rates, increasing electricity prices, and rampant inflation upping project costs) is very real and very expensive — both for energy users and the planet.
Fortunately many companies can transition to cleantech far sooner than they realize, thanks to EnPowered.
How EnPowered can help your business right now
Events in Ukraine have shown that businesses need to act fast to reduce their exposure to fossil-fuel energy risks. At EnPowered, we work together with cleantech solution providers to accelerate the sustainable energy transition.
EnPowered Payments is an on-bill payments platform that helps solution providers close more deals, faster. Payments empowers customers to use a portion of their energy savings to pay for their cleantech solutions through their electricity bill. This reduces paperwork, and clearly shows the impact that their cleantech solutions are having on energy costs.
This allows your clients to purchase your solutions with no upfront costs and start saving immediately. Once their purchase is paid in full, they get 100 percent of their solution’s savings, and their energy bills get even lower.
With EnPowered Payments, you will reduce customer-facing risk and distinguish yourself from competitors by offering better value.
Contact us today to learn how EnPowered Payments can help you speed up your cleantech transition and minimize the impact of global instability on your energy program.
