How does the energy industry affect businesses? What implications does it hold for marketers?
For some companies, energy is energy — a cost of doing business, but not something they invest much attention or research in. As a result, many don’t think about where their power comes from and can sometimes ignore or fail to investigate shifts in the sector.
Trends in the energy industry, however, often have major impacts across the business world. Some of these may create advantages savvy business owners can take advantage of — or they may cause issues for companies that don’t know change is coming.
Shifting priorities and market conditions in the energy industry are having a significant impact on all businesses. With knowledge of these trends, companies can take steps to prepare for the future.
Energy Industry Disruptions Have a Ripple Effect
Like every other sector, the energy industry felt major impacts in the wake of COVID-19’s spread in early 2020. Supply shocks that saw demand crater in some areas and surge in others forced the industry to move fast to handle shifting needs. Prices for goods, like oil, fell sharply at the same time. The most likely effect of all this is market consolidation once the crisis is over.
Interestingly, these disruptions may also help speed up the ongoing transition to clean energy. Demand for fossil fuels is often forecast to peak within the next 10-20 years, though analysts disagree on when exactly this will happen. Some industry observers even argue that we have already passed peak demand. The energy industry as a whole is moving toward a clean energy transition in anticipation.
2020 has seen the biggest year-to-year reduction of carbon dioxide emissions on record, as energy demand has plummeted around the world. This moment may provide an opportunity for companies wanting to push for greener and more sustainable energy choices.
Businesses Can Respond to Shifts Toward Green Energy
Looking for green energy companies to partner with may be a good long-term strategy for businesses wanting to stay ahead of the curve. While oil and gas — and coal, to a lesser extent — remain the biggest sources of power now, renewables are catching up. In general, energy experts agree that an industrywide transition to green power sources is more a matter of when than if.
Consumer perception of sustainable energy is overwhelmingly positive, while opinions on fossil fuels are much more divided. Dedicating resources to working with green power companies could also help businesses wanting to improve their reputation or demonstrate a commitment to environmental stewardship.
For example, marketing companies could take advantage of the moment to offer eco-friendly rebranding services or help businesses establish partnerships with sustainable brands and energy companies.
Marketing companies working with clients in the energy industry should also stay on top of these changing trends. Current research will likely help fossil fuel companies market and rebrand during their energy transition.
Paying attention to shifting demand and volatility is also a good idea for businesses that want to invest in the sector and minimize risk. Implied instability caused several major energy stocks to spike earlier this year, in the wake of OPEC’s failed output deal and the early days of the coronavirus pandemic.
For companies not interested in working with the energy sector, the shift will probably be harder to notice. Still, these business owners may find that new energy projects in their area are solar farms and wind turbines, rather than fossil fuel-fired plants.
Pivot to Green Energy Opens New Options for Businesses
The shift toward sustainable energy may also have significant implications for businesses. Consumer and enterprise solar technology, for example, is more accessible than ever, with prices per watt of this energy falling consistently each year. It’s also on track to become even cheaper over the next few years.
Businesses that want to outfit their office with a photovoltaic solar system can take advantage of this trend. There is a wide range of solar battery and system providers available. An extension to the federal Solar Investment Tax Credit also means that, until 2022, consumers wanting to install individual or commercial systems can write off 26% of the cost on their federal tax return.
Currently, solar systems are efficient enough that an office with enough roof space can offset a significant amount of its yearly energy consumption, potentially saving thousands of dollars or more. According to market data from EnergySage, the average commercial owner was able to reduce their energy bill by 89% with current solar tech. Solar innovations may soon make commercially available panels even more efficient, allowing businesses to further reduce their energy spending with office solar systems.
For marketers, these innovations are worth tracking. Right now, many businesses are trying to demonstrate their commitment to sustainable practices. Showing off a green, solar-powered building could be a draw for some audiences. Solar system manufacturers may also want to ramp up advertising as these systems become more affordable. Knowledge of solar tax credits and potential savings could streamline marketing research for these companies.
Challenges Remain for Renewable Power
However, despite advances, the necessary tech is still expensive and somewhat unwieldy. For example, solar batteries with enough storage capacity to keep a home or office powered for more than an hour or two remain both bulky and costly.
While companies are constantly iterating on their battery tech, these barriers may limit the adoption of solar systems to larger businesses. For example, Netflix outfitted its new office with envelope solar panels in addition to a range of other high-tech amenities.
Companies in areas with additional solar incentives — like state or local loans, tax breaks or leasing programs for office photovoltaic systems — may also be able to adopt these systems before prices come down.
How a Changing Energy Industry Will Affect Business
Market conditions and the coming demand peak for fossil fuels is pushing the energy industry in a new direction. Because the sector is essential to all other industries, these new trends are already having a significant impact on the business world.
The pivot to eco-friendly energy sources is likely to intensify over the coming years. Businesses wanting to take advantage of this shift may want to consider investing in sustainable energy — whether that means partnering with a green energy company or adopting tech like a commercial solar system.
Lexie is a graphic designer and marketing enthusiast. She loves checking out local flea markets and taking her goldendoodle on hikes. Follow her on Twitter @lexieludesigner and check out her design blog, Design Roast.