In contrast, most businesses and institutions are short electricity. After employee salaries and benefits, electricity is often the largest indirect operating cost. For some businesses, like commercial real estate, it can represent 30% or more of total operating expenses. Unlike employee costs, electricity prices are uncontrollable and volatile. Over time, kilowatt hour unit costs are susceptible to broad macroeconomic trends. They are driven by the marginal costs of production, primarily fossil fuels like coal and natural gas. While low today, wholesale natural gas prices have varied by 400% since 2008. A hiccup or shock in supply and demand can have profound effects on the unit cost of electricity. By being short electricity, organizations put a large part of their margins and profits at risk to factors beyond their control.

What can be done to better match the term of fixed assets and power costs? Historically, not much. Most power contracts are limited to 2-3 year terms, because electricity suppliers cannot afford to assume the risk of fuel price changes. Financial hedges for fuel prices can be purchased but they also have a short life and are expensive. Renewable power provides the potential answer. Because renewable sources like wind and solar do not require fuel and have low ongoing costs, they can provide a 15-20 year physical hedge against future power price increases. The value of the hedge accrues to the renewable power owner ““ typically utilities or developers.

CustomerFirstRenewables (CFR) is changing where the value of renewables is captured, with direct user investment in utility-scale renewable energy sources. CFR offers a flexible, customer-tailored contract that offers many financial and environmental advantages. CFR’s service model provides value tailored to customer needs and far exceeding what they can do on their own:
“¢ Reduced electricity costs compared to conventional electricity supplies
“¢ A natural, physical hedge against future price growth in electricity markets
“¢ Production and management of carbon and renewable energy credits
“¢ Brand enhancement through demonstrated environmental stewardship, and
“¢ A true financial share in the renewable energy upside as prices grow and fluctuate

To know more about renewable sources supply solutions offered by CustomerFirstRenewables, log on to http://www.customerfirstrenewables.com

Visit the Author's website: http://www.customerfirstrenewables.com/

The post Why Businesses and Institutions Should Go Long Renewables appeared first on Submit Articles.

However, despite the significant and laudable commitment of these organizations, many of the current purchasing arrangements do not help them realize the full value of renewables. These agreements tend to fall into one of the following categories: (a) Purchase of green electricity from a provider; (b) Displacement of retail purchases through a single on-site project (e.g., a roof-top solar unit); or (c) Purchase of RECs from a provider. However, these arrangements do not effectively position end-users to capture three important sources of value:

* Hedge Value. Direct ownership of solar or wind generation assets (either in full or in part) provides a hedge against escalating electricity prices that are driven by inflation in fossil fuel prices. They also offer a hedge against future carbon prices.

* Other Economic Benefits. Under most common structures, the lion’s share of benefits like cost savings, tax benefits, government incentives accrue to equity investors. In an equity-like position, these benefits would flow directly to end consumers.

* Brand Value. In most cases, REC purchases alone limit the impact organizations can have transforming the green energy landscape.

Recognizing these shortcomings, CustomerFirstRenewables (CFR) was formed in early 2010 to help organizations achieve their energy goals with tailored and profitable renewable power supply solutions. It also provides a compelling return on investment.

CFR starts the process by developing a clear understanding of customer needs. Because CFR’s proposal development process is highly-collaborative, it also builds organizational buy-in and momentum for the agreed solution. CFR leverages its network of value chain partners to deliver the solution and ensure it delivers attractive benefits over the life of the renewable assets.

To know more about renewable power supply solutions offered by CustomerFirstRenewables, log on to http://www.customerfirstrenewables.com

Visit the Author's website: http://www.customerfirstrenewables.com/

The post Capturing More Value from Renewables: A Better Way for Large End-Users appeared first on Submit Articles.