National governments are currently in the process of crafting economic policy with a strong environmental focus. Government incentives for investment into renewable energy sources, such as subsidies and tax credits, are becoming an increasingly popular way for governments to meet national pledges to reduce greenhouse gas emissions. In this context, businesses and individuals alike have an incentive to shift production and consumption decisions based on changing social norms and on the carrots and sticks contained in environmental policy.
In this blog post, we will explore how the increased use of renewable energy is impacting the consulting industry, and what consulting companies must do to adapt and thrive in this changing landscape.
Rise of Renewable Energy
Renewable energy sources offer at least three key advantages over traditional non-renewable energy sources like coal, oil, or natural gas.
Firstly, they promise to produce less greenhouse gas emissions over their lifetime. The National Renewable Energy Laboratory has estimated that renewable energy sources emit around 50g CO2/kWh over their lifetime, compared with around 1000g CO2/kWh for coal and 475g CO2/kWh for natural gas.
Secondly, renewable energy is naturally occurring and based on resources that are continually replenished. Although this does not offer a limitless source of energy, since the availability of renewable energy in each region is subject to geographical and climatic conditions, it could offer a more sustainable source of energy in the long run.
Thirdly, renewable energy sources can be cheaper in the long run. Although the initial capital cost of setting up renewable energy infrastructure can be high, they tend to have lower operational and maintenance costs. Also, the cost of renewable technologies like solar panels and wind turbines has been decreasing over time due to continued technological advancements and economies of scale.
The rise of renewable energy has been nothing short of remarkable in recent years. The industry has gained significant momentum, and also emerged as a major player in the global energy market. The dollar value of the renewable energy market has been steadily increasing. In 2022, global investment into renewable energy projects exceeded $1 trillion. This represents a substantial increase from previous years, highlighting the level of confidence and the financial backing behind the renewable energy sector.
In terms of energy production, renewable sources have witnessed remarkable growth. For instance, the International Renewable Energy Agency (IRENA) reported that 260GW of renewable energy capacity was added in 2020. Despite the COVID pandemic, this expansion was almost 50% higher than the renewable energy capacity added in 2019. By 2020, renewable energy accounted for nearly 30% of global electricity production. This is a substantial increase compared to previous years and is projected to rise further in the coming decades. This highlights the swift transition that is occurring towards renewable energy sources as well as the priority being given to this sector by governments and the private sector.
The rise of renewable energy has also contributed to substantial job creation. The sector has become a significant employer, offering opportunities across various segments of the value chain. According to IRENA, the renewable energy sector employed over 12.7 million people globally in 2022. This number is expected to continue growing, and not only represents employment but also contribution to economic growth and development through investment and the growth of supporting industries and local job markets.
Impact on the Consulting Industry
As the shift towards renewable energy sources continues to gain momentum, consulting companies should consider ways to adapt their services in order to remain relevant in this changing landscape. Companies that fail to adapt risk falling behind their competitors and missing out on the significant opportunities presented by the growing renewable energy sector.
Consulting companies could adapt by offering services related to energy project development, financial analysis, and energy efficiency. These services are in high demand as businesses seek to reduce their carbon footprint and transition towards renewable energy sources.
In the following section we will consider five ways that consulting firms can seize the opportunities offered by this growing market.
Five Ways Consulting Firms can Embrace Renewables
1. Develop Expertise in Renewable Energy
Consulting companies should develop expertise in renewable energy so that they can offer valuable insights and guidance to clients seeking to transition towards renewable energy sources. This includes understanding the technical aspects of renewable energy, such as solar and wind power, as well as the regulatory landscape and financial considerations. By developing this expertise, consulting companies can stand out from their competitors and become a go-to source for clients.
2. Understand Key Trends
It’s crucial for consulting companies to stay up-to-date with the latest technological developments and innovations in renewable energy. This will enable them to offer cutting-edge solutions to clients and stay ahead of their competitors. Staying on top of trends and emerging technologies will also help consulting companies identify opportunities for growth and expansion in the renewable energy industry.
3. Partner with Other Organizations
As the renewable energy industry continues to grow, collaboration and partnerships between consulting companies and other organizations are becoming increasingly important. Consulting companies can partner with renewable energy companies to offer joint services, or collaborate with universities and research institutions to stay on the cutting edge of renewable energy technology. By working together, consulting companies can leverage the strengths of other organizations and develop more comprehensive solutions for clients.
4. Offer Comprehensive Solutions
Consulting companies should ideally offer comprehensive solutions that go beyond basic renewable energy services. This includes services related to energy efficiency, carbon management, and sustainable practices. By offering a full suite of services, consulting companies can become a one-stop-shop for clients seeking to reduce their carbon footprint and transition towards renewable energy sources.
5. Embrace Sustainable Practices
Consulting companies must practice what they preach and emphasize sustainable practices internally. This includes reducing energy consumption, implementing recycling programs, and reducing waste. By doing so, consulting companies can demonstrate their commitment to sustainability and position themselves as thought leaders in the renewable energy industry.
The bottom line
The shift towards renewable energy sources represents a significant opportunity for the consulting industry. If consulting companies want to seize the new opportunities offered by the shifting business landscape, they should examine ways to adapt their services to meet the growing need that clients have for expertise in renewable energy.
Till Margraf is in his late 20s and a former consultant at Roland Berger. Till now works in the in-house consulting team at Enpal, a unicorn in the renewable energy space. After studying business administration in Cologne, he completed the CEMS Master in International Management in Lisbon. In his free time, Till enjoys sports and going out into nature.
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