Applied Solar Plan, Research Paper Example

Executive Summary

Applied Solar Inc. is a well-known and established organization within the renewable energy industry. They are foraying into energy management applications that serve the particular needs of large buildings and work spaces. This approach is tailored towards concentrating on providing systematic and constructive management options for larger establishments.  This development will aim to help organizations reduce their energy costs and provide a manageable approach to operating efficiently and conservatively.  Applied Solar Inc. is one of the few organizations that are in the front producing and distributing renewable energy resources. Their purpose of backing energy management applications are due to the elements that create a positive impact on how energy resources are currently used, more particularly helping to find a more sustainable approach. By providing establishments with energy management applications, they aim at reducing carbon emission so that establishments are aware of their contribution to the environment. In order to provide a successful business strategy for the organization, they must implement a strategic plan geared towards the promotion the renewable energy, such as, Feed-In tariffs, and quota obligation systems with tradable green certificates (TGC). In order to be successful in their endeavors they must take up strategies in which they are able to attract investors and customers.

Background

Applied Solar Inc.,is one of the leading renewable energy organizations in the industry. Applied Solar Inc. prides itself on being one of the most recognized organizations around the world. The organization specializes in installing solar panels for buildings, equipping administrators with the necessary knowledge needed to manage and capacitate a culture of energy conservation throughout their organizations. Applied Solar Inc. main objectives are to make preservation and conservation are a necessary initiative to organizations today in order to make upcoming generations be environmental responsible.

Organizational Missions and Statements.

Applied Solar Inc.’s mission is to provide organizations the capacity to become an independent energy users. It is the company’s vision to reduce the energy use cost among businesses to at least 34% in the next few years. Their values of being dependable in assisting households towards realizing their responsibility to the environment. Applied Solar Inc. promotes their sustainable living approach throughout the community and help to provide a strength in establishing their values towards society. The company is looking to expand to implementing energy management applications for larger establishments to monitor and self-manage their energy consumption. During this economic situation, the organization must establish a set strategic plan for the promotion of the company and their products.

Environmental Scan

People in society are more aware than previous years on their carbon footprint. Applied Solar Inc.environmental scan is the focus on the internal and external environment which impacts the company’s success. With the advent of recent environmental issues that include, the continuation of habitat loss, climate change, renewable energy options, invasive and misplaced species that interfere with the ecosystem, and ongoing pressure to develop and lead a sustainable lifestyle has presented opportunities and challenges for Applied Solar Inc. The renewable energy sector is been one of the most rapidly growing industries within the United States and throughout the world. “Renewable energy investment of $150 billion worldwide in 2009 was the equivalent of nearly 40 percent of annual investment in the upstream oil and gas industry, which topped $380 billion.” (World Watch Institute 2010) The average energy companies is projected to increase their annual growth by 30% in the next decade. The increase has largely been from the increased customer and utility demand, as a result the prices of energy has risen with the amount of consumption.

However, there are still certain barriers that are presented in the global market for renewable energy. There are several areas that are critical for the market to be successful that includes cutting costs for fossil fuels to be used for renewable energy. Certainly the aspect of funding and investment is essential, “In many cases, the key deterrent to investment is the lack of regulatory frameworks suitable to ensuring economic returns.” (Deloitte, 2013) There needs to be a clear navigation through the global market, and energy companies that are conventional need to be democratized to transition the public to generate their own energy. It is important within the industry that the organization need to utilize its resources of manpower, clients, and operations in order to sustain their market share. Externally it is critical for investors, developers, government entities, and utilities to understand how renewable energy is evolving within society, so that it can have a long term impact from just short term decisions.

Alternative Strategies

There are several strategies that Applied Solar Inc. can implement for their organization in order to promote their new products and services. For these new services to be successful and attract bigger investors, Applied Solar Inc., will need to implement either a Feed-In tariffs strategy or quota obligation system with tradable green certificates (TGC) strategy.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.  Several government entities have created laws and regulations to control and regulate FITs, as well as the Renewable Portfolio Standards (RPS) and others, which have created subsidies to protect the renewable energy markets. 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. These factors have included the increase in energy consumption as well as the closing of gas and coal-fired generation plants. The rates of electricity have also increased, but have been balanced out with the practice of utilizing higher-cost fossil fuel plants when demand exceeds the capacities of facilities that are lower cost.    Successful feed-in policies have included design features that reduce or entirely 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 a simple structure whichallows businesses with varying energy consumption to participate, as well as low administrative costs which are flexible.

The Feed-In Tariff system has been 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 downside however is that this could force other energy companies or plants to close down as such happened in Europe. This could impede on the job growth, and the economic growth if not successfully regulated.

The quota obligation system with tradable green certificates (TGC) is another strategy that can be implementedin 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, a measure on the Eco-scale of the amount of environmental sensibility.  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 electricity.  (Van der Linder et al., 2005) Currently they are still being implemented in countries throughout the world, and have been a method of RPS for organizations to show their compliance. (SP 2011)

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.A Feed-in tariff system has been found to be the driving force of renewable energy development in Europe and currently being implemented around the world.

Risk Management Plan

Applied Solar Inc. plan rick management plan involves identifying the risks in order to evaluate their effect (negative or positive). The point of the risk management plan is to understand the probability of a risk happening, allowing the organization to weigh the cost and benefits. If the risks are negative, then the organization will be able to circumvent resources in order to amend the strategy, correct budgets, and allow more time in order to mitigate risks. Through mitigation, the organization will be able to reduce the probability of the identified risks to reduce the overall impact or negative risks.

• Identify Risks
• Get input
• Identify risk impact
• Risk Element
• Rank Risks
• Develop Mitigation Plan
• Develop Contingency Plan
• Monitor Risk

Contingency Plan

For risks that cannot be avoided it can be either a liability, threat, or severity of risks which includes, energy price volatility and changes in energy technology. This will be reserved for high and medium risk elements.  The contingency plan will establish several teams that will assign to participate in upgrading technology, and recovering Applied Solar Inc. operations. The assigned teams will be responsible for recovering data on computers, assessing energy prices to match market and demand. Information from operating systems, and daily maintenance and operations.  The contingency plan duties includes: to continue operations and production services within Applied Solar Inc.; protect employees, customers, and other informational assets within the normal business hours; ensure viable capabilities in response to changes in technology and energy prices, and manage all response activities to risk impact. If the strategy fails to be successful the company will be able to implement the quota obligation system as an attentive strategy in adapting to the changing environment.

Gnatt Chart

The implementation of the strategy begins in February 2014 with the test run in October and November 2014, and final implementation December 2014. The objectives are to create assign teams to monitor risks. Importantly look at other fee-in strategy plans in other sectors to mirror their success and see what does not work.  Resource allocation will be used by setting up several teams to monitor each milestone, outsource, and implement time management strategies.

References

Applied Solar Inc. (2013).  Retrieved from. http://www.appliedsolar.net/why_choose_solar.html

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

Deloitte report indicates rocky road ahead for renewable energy sector. (2013). Deloitte. Retrieved from http://www2.deloitte.com/global/en/pages/about-deloitte/articles/rocky-road-ahead-renewable-energy.htm

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

Renewable Energy at the Tipping Point (2011). World Watch Institute. Retrieved from http://www.worldwatch.org/node/6482

The Potential of Tradable Renewable Energy Certificates (TRECs) in Canada. (2011). Sustainable Property. Retrieved from http://www.sustainableprosperity.ca/article2166

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