Energy-Forward Site Selection
Pictured Above: empty road, landscape, sunset sky and wind turbines
Date Posted: September 21, 2023
Posted In: Discussion, Environment/Sustainability,
From Business Facilities: In recent years, discussions around energy supply have gone from occasional, to frequent, to ubiquitous in the world of corporate site selection. Historically, quantity and cost were the key energy-related factors in location decision-making. The source (type) of energy has now become the third prong of energy strategies.
The significant uptick in interest in where energy is coming from can be attributed to a variety of forces—some internal and some external. Regardless of the motivations, this topic comes up early and often as companies work to make location decisions regarding existing and future facilities.
Terminology abounds: clean, green, renewable, low-carbon, net zero. Where does nuclear fit in? What about the numerous variations of hydrogen energy? Rather than parse these terms, let us simply acknowledge that companies are placing a large emphasis on cleaner, lower-carbon energy supplies, regardless of the terminology used.
This “energy-forward” mentality has created two significant new dynamics in the site selection process.
Energy Source Requirements: Add Complexity To Site Search
For companies seeking specific energy attributes, the complexity of site selection has increased. Energy source concerns are additive, and the litany of location decision factors just got longer. This complexity adds pressure to timelines, and in some instances lengthens them. For those with moderate to ambitious clean energy goals, energy source factors may also impact implementation and operational timelines of expansion activities. Given the lengthy timelines around delivering new energy infrastructure, the lack of immediate availability constrains the ability of some projects to execute at the company’s preferred pace.
The timeliness of availability is not expected to be resolved any time soon. In the near-term, there simply is not enough supply to keep up with the growing demand for clean energy. While globally we are adding significant low-carbon energy supplies each year, the overall worldwide demand for energy continues to increase (up 14% from 2011 to 2021). Further, traditional energy plants are being retired. When considering rising overall demand and traditional retirements, each megawatt of clean energy is not available for the market to gobble up; instead, portions of each green megawatt are already spoken for just to keep the lights on and to offset retiring supplies.
The progress is net positive, but it is incremental. Recent studies by the International Energy Agency (IEA) have suggested that the pace of renewable capacity additions needs to increase by 60% to 100% in order to meet net zero by 2050.