Cost-Effectiveness

First among the reasons is the big one: Alternative energy has become much more cost-competitive. Michelle Comerford, leader of the industrial and supply chain practice at site selection firm Biggins Lacy Shapiro & Co. in Cleveland, says buying renewable energy cost 50% or more as recently as five years ago, but that that figure is now in the single digits in the regulated market. In some higher-cost parts of the country, she adds, available incentives or credits actually make renewable power a cost-saver versus traditional sources.

Similarly, proximity to a generating site can create situations in which renewable energy is very competitive: One of Comerford’s clients in West Texas is drawing some of its power from nearby wind installations and paying a premium of less than 5% to traditional alternatives, in part because its transmission costs are lower.

Market Fundamentals

The growing supply of clean energy is being met by rapidly growing demand–and not just because traditional sources of power are being steadily replaced or because plant construction activity has rebounded in a terrific way from the depths of the COVID-19 pandemic. The job market is playing a role in the rise of alternative energy destined for industrial uses. As many companies increasingly struggle to find and retain workers, Comerford says they are adding to their investments in automation, a strategy that is adding to their energy needs.

In one case, a project she worked on that would have traditionally called for about 4 MW of power now requires 10 MW. Such demand growth, she says, is moving energy supplies up project checklists.

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