The shift toward decarbonization and renewable energy is a global topic, and there’s no denying the urgency and consensus, but the path is not without obstacles. Imprecise data and lack of resilient infrastructure – byproducts of a burgeoning industry – are few of the roadblocks that exist. But the ever-present threat of policy changes is posing a serious challenge for clean energy initiatives.
Last week, Arizona regulators voted to re-open the 2016 Net Metering policy, which may allow electric utilities to drastically lower the rates they pay to homeowners with rooftop solar for their excess power. Coming just a few months after California’s decision to cut rates for net metered power, it’s another indication states are struggling to manage the intersection of solar growth with the existing grid.
As rooftop solar adoption increased over the past several years, net metered energy supply has become abundant and cost low, inversely affecting the cost of traditional power for non-solar customers. The decision is expected to curb sales for home-solar providers and deter investors.
The lesson here is that political decisions and regulatory changes can have a profound impact on the growth of solar power and renewable energy. Such events set a precedent of uncertainty for industry stakeholders, potentially hindering long-term planning and investments.
Complexity and Uncertainty: Insufficient or non-existent data prevents companies from being able to accurately assess the costs, benefits, and risks of decarbonization initiatives. In some cases, it’s challenging to determine the financial viability of new technologies because potential problems are not well understood, and costs are viewed as highly variable.
Misallocation of Incentives: Government incentives don’t always hit the mark. Often in scenarios with multiple stakeholders, the allocation of tax credits remains a complex issue. Moreover, there’s an imbalance between early-stage and late-stage financing in the climate startup sector, leading to promising ideas falling by the wayside.
Infrastructure Challenges: Even when technology and financing are available, infrastructure remains a barrier. There’s a shortage of skilled professionals for the jobs of the future, and the energy grid is often unprepared for the demands of the green economy. A lack of charging infrastructure, for instance, hampers the adoption of electric trucks.
Complexity and Uncertainty: Decarbonization initiatives are complex and involve unfamiliar risks. Companies and organizations need to navigate this complexity with limited resources. The fear of making the wrong investment or choice can paralyze decision-makers.
While these obstacles are significant, they represent opportunities for growth and improvement. Leaders across various sectors acknowledge the inevitability of the energy transition and recognize the potential for innovation and profit. The challenge of deploying and scaling sustainability projects effectively presents exciting opportunities for the energy consulting industry and new trades.