Who owns renewable energy?
Wind and solar power don’t produce the heat-trapping carbon dioxide that fossil fuels do, which means they can power a global clean energy transition. A global shift to these cleaner fuels will help keep the planet safe from climate change, and investors are rushing to buy into renewables.
Utilities are increasingly acquiring clean energy assets as a way to meet customer demand and build a rate base that will grow earnings over time. However, in order to own a renewable asset, utilities must have a quantitative story and a qualitative one that can be persuasive to regulators and customers.
The long-standing federal tax credits and accelerated depreciation have played a major role in creating and growing the renewables business, but these two tools are coming to an end. As a result, it will become more difficult for utilities to sell power from their own renewable assets at competitive prices.
To address this competitive pricing gap, utilities must find ways to close it quickly and cost-effectively. In addition to the long-standing federal incentives, there are other tools that can reduce the price gap and enable utilities to own a portfolio of renewable energy assets that will grow their power portfolio at competitive rates over time. Taking these steps will allow utilities to own their assets and build their renewable power portfolio as part of their overall rate base and growth strategy, which will benefit the environment, their shareholders, and their customers.