Alternative Strategies for Applied Solar, Research Paper Example

Introduction

Applied Soar Inc is an organization in the renewable energy industry that is trying to establish roots based on energy management applications, particularly in establishments such as large building and work spaces.  The purpose is to help the large establishments reduce carbon emissions.  In addition, the company is aware of their role in the pioneering of the creation of additional sustainable energy resources for business establishments.  In the process, Applied Solar Inc. is dealing with an economic situation where large investments are needed and not fully attracted to by investors.  Therefore, it is important for the corporation to understand the current economic system of operation and conformto the system in order to attract investors, individuals and institutions, in order to influence the community with their product.  The current paper investigates the economic situation of promoting renewable energy corporations.  The focus of the paper is geared on two alternative strategies that are essential for the promotion of a renewable energy company, such as Feed-in tariffs and quota obligation systems with tradable green certificates (TGC).

Alternative Strategies

There are strategies needed for Applied Solar Inc to implement in order to promote renewable energy systems.  In order for renewable energy systems to be successful, feed-in tariffs and quota obligation systems are needed.  Feed-in tariffs are payments to individuals or businesses to anyone that owns a renewable electricity system.  For example, for every kilowatt hour that is generated, a payment is generated.  The amount paid is dependent upon the type and size of the system used in order to generate renewable energy. (Feed-In Tariffs)    Feed-In Tariffs have proven successful in European markets and are based on certain factors.  Successful feed-in policies have included design features that reduce or completely eliminate the risk for potential investors.  Such design features include long-term contracts lasting over 15 years, guaranteed buyers, and prices that offer a reasonable return.  In addition, other features should include simple structure which allows a different variation of businesses to participate, as well as low administrative costs which are flexible.   One of the most important factors that should be implemented into the Feed-In Tariffs is the integration of a long-term plan to include favorable tax treatment.  (Center for Resource Solutions, 2002)

The Feed-In Tariff system has shown successful in the United States as well.  For instance, the implementation of the Public Utilities Regulatory Policy Act (PURPA) in the State of California developed long-term contracts and mandatory fixed prices.  The results provided environmental markets to secure financing for projects which increased the market for the manufacturing of wind, biomass, and geothermal, solar and hydro technologies.  In fact, California remains one of the leaders in renewable energy sources.  (Center for Resource Solutions, 2002)

The quota obligation system with tradable green certificates (TGC) is another strategy that can be implemented in order to help promote and grow the Applied Solar Inc.  The quota obligation system uses a decentralized market mechanisms to meet the national target.  For instance, the quota system assigns what is called a scarcity price to the “greenness” factor of electricity, more commonly known as the green value.  In this type of system, there is no differentiation between the types of alternative renewable energy system, such as wind, solar, biomass etc.  (Bohringer et al., 2006)  A quota obligation system aims to support renewable energy through an increased demand for renewable energy.  The support is met by establishing the amount of electricity supply that must be produced from the source.  In addition, this type of system uses a penalty for noncompliance issues.  In order to help businesses to not have to worry about verifying compliance, the system provides flexibility through the use of Tradable Renewable Energy Certificates (TREC).  The certificates represent the value of the energy produced from the renewable source and an al-low sale of that to be removed from the sale of the electricity.  (Van der Linder et al., 2005)

Since the quota obligation system does not differentiate between the types of renewable energy resource, whether wind, solar, biomass, hydro, it would be more efficient and effective to implement the Feed-in tariff system as the strategy for this company.  The Feed-in tariff system has been found to be the driving force of renewable energy development in Europe.  In addition, there has been success in Germany, Spain, and the United States

Summary

Energy efficiency technology and the implementation of efficiency policies have increased World-wide.  Offering energy efficiency technology to major energy-consuming sectors, such as industries and buildings can help reduce overall energy usage.  In addition, the technology can offer a payback, further yielding energy savings.  In order to promote investors, as well as businesses for solar use, the “green” awareness as well as a strategy in order to promote the product, as well as investors, the Feed-in-tariff strategy will be implemented.

In order to implement this strategy, there are certain steps that need to be established and met.  Firstly, a business model must be developed in order to establish leadership, continue growth and create new opportunities for all involved.  For instance, the leaders of organization must organize the strategy and follow the plan, as well as provide information to employees.  In addition, the company will reach out to the multiple channels through the different businesses and investors that already have commitment.  There are many different partners, contractors, distributers, system integrators, and machine manufacturers that can be accessed in order to ensure that the company is not solely dependent on a limited number of large investors.  Furthermore, in order to remain successful with these business affiliates, a strong, long-term business relationship will be built.  It is also important to adapt to the local needs of the business.  With operations in different communities, it is important to find the best technology and quality for energy management in the differing communities.  The presence in diverse markets for energy renewable resources can ensure that we understand the cultural needs in different communities.

Management should also take into consideration the risks that are involved through a risk assessment. It is possible that since the policy objective is greenness of the energy production, and therefore the feed-in-tariff system may create a large excess costs.  The excess cost may be interpreted as additional costs for the policy makers.  Table 1 below represents a Gantt chart illustrating the implementation strategy.  The implementation of the strategy begins in February 2014 with the test run in October and November 2014, and final implementation December 2014.  (Table 1)

References

Bohringer, C., Hoffmann, T., Rutherford, T.F. (2006).  Alternative Strategies for Promoting Renewable Energy in EU Electricity Markets.

Center for Resource Solutions.  (2002).  Renewable Energy Policy Options for China: A Comparison of Renewable Portfolio Standards, Feed-in Tariffs, and Tendering Policies.  Retrieved from: http://www.resource-solutions.org/pub_pdfs/IntPolicy-Feed-in_LawsandRPS.pdf

Feed-In Tariffs, Ltd.  Feed-In Tariffs.  Retrieved from: http://www.fitariffs.co.uk/FITs/quick/

Van der Linden, H.H., Uyterlinde, M.A., Vrolijk, C., Nilsson, L.J., Khan, J., Astrand, K., Ericsson, K. and Wiser, R.  (2005).  Review of International Experience with Renewable Energy Obligation Support Mechanisms.  ECN.  Retrieved from: http://emp.lbl.gov/sites/all/files/REPORT%20lbnl%20-%2057666.pdf