From photovoltaic solar panels to kinetic energy adapters for stationary bicycles that generate electricity from pedaling, entrepreneurs are taking advantage of the green revolution by finding renewable energy solutions. Since we use energy for almost everything, the recent trend towards greener, more sustainable technology is creating many opportunities for entrepreneurial-minded individuals. But is this just a fad? Or are there viable business opportunities for the long term? In this article, we explain why we think the trend towards renewable energy is here to stay and give some tips on starting your own renewable energy business.
Renewables Are Here to Stay
As the global population rises, the reality of finite resources is intensifying. Our energy requirements cannot depend on fossil fuels forever, and although advances in technology allow us to tap into reserves that were inaccessible in the past, at some point we will run out.
These concerns, along with the negative impacts of burning fossil fuels, have created an environmentally and socially conscious mindset amongst different sets of economic actors, including consumers, investors, firms and governments. Firms and investors looking for profits have taken advantage of consumer interest in cleaner energy alternatives and government-incentivized greener business initiatives.
Furthermore, political instability in regions like the Middle East have set many nations on a quest for energy independence and security. Solar, wind and geothermal energy sources can be tapped into from essentially anywhere in the world – at least in varying degrees – thus offering the hope of energy independence and security. With these factors driving the shift towards renewable energy, now is the time to start looking for opportunities to help solve the world’s energy problems and, perhaps, make money.
Recognizing the Opportunity
There are innumerable opportunities for implementing an innovative renewable energy solution. However, the best place to start looking is in your own area of expertise. Think about industries you’ve worked in and consider how renewable energy could benefit them.
Also, remember that becoming a renewable energy entrepreneur doesn’t mean you have to build your own wind farm or hydroelectric dam. Renewable energy is about more than just electricity generation; it is also about storage, conservation and distribution. You also don’t need to invent a new product or technology, choosing instead to get involved in installation, repair/maintenance or consulting. Think broadly, and remember your areas of expertise.
Finally, talk with friends, family, and colleagues as they will help push you towards ideas for things people want or need. Some people build a business around an idea and then try to sell that idea rather than building the business around something people already want to buy. Green consumers are no different.
Green Consumer Challenge
Despite all the hype about environmental sustainability, there is evidence suggesting that green consumers are still looking for the same things most consumers want: individual benefit at a low cost. Although the environmentally conscientious market, labeled LOHAS (Lifestyles of Health and Sustainability), is growing, the green market is still relatively niche. Thus, one needs to remember to educate consumers on the advantages of renewable energy, including showing them how it can add more value to their lives at a lower cost.
Consumers, however, are not the only group that one needs to consider when looking for the right opportunity. One must also think about how the product and service will affect or be affected by other actors, such as suppliers, the government, the competition and financing organizations like banks. All of these actors could have an impact on the success of your business, so it is helpful to think about the role they will play while you’re in the development stage.
Developing a Business Plan
In devising a business plan, it is helpful to determine if there are other businesses in other regions of the world that are already offering a similar product or service. Look at the fundamentals of those businesses, and use them as models for developing your own plan.
Regardless of how extensive you decide to make your business plan, you definitely need to do some initial market research and summarize a business concept. You will want to analyze cost and revenue projections and set out some key milestones for developing and launching your business.
Remember to conduct interviews with potential customers in order to get a sense of the demand for your product or service and how best to introduce it to the market. Also, contact suppliers to get price quotes on materials and services that you will need to manufacture your product or deliver your service. Once you’ve completed your business plan, it is time to figure out how you are going to finance your business.
Financing Your Business
Every business succeeds or fails on the basis of its ability to sustain itself financially, but it could take some time before revenues are large enough to cover costs. Although a number of financing options for new businesses and startups exist, research shows that almost 90% of entrepreneurs invest some personal savings at the early stages of their business and over 74% said that personal savings were the primary source of initial financing. Using your own savings may also serve to show other potential investors that you are serious about the future of your new venture.
One could also attempt to find external financing from banks, venture capital or the government. However, financing the first two options may be harder to obtain in the early stages as they will want to see an existing company with strong growth potential before forking over money. While it can take some time to receive approval and not all businesses are eligible, government funding could be a good way to go given the numerous incentives for cleaner, more sustainable technologies and services. Visit the U.S. Department of Energy site for current Energy Efficiency & Renewable Energy funding opportunities and the National Renewable Energy Laboratory (NREL) site for renewable energy project financing information.
The Bottom Line
Once you’ve had an idea, made a plan and figured out how to finance your business, you’re on your way to becoming a renewable energy entrepreneur – though the work has just begun. Now you’re going to have to convince consumers to spend money on your product or service instead of an alternatives. This is not easy, but it can be very rewarding, especially since, with renewable energy, you are sustaining your livelihood as well as that of people all over the world for many generations to come. Renewable energy entrepreneurs may just save the planet.