Business Management of Risk and Opportunities of Solar Power

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Abstract

The paper looks at renewable energy from an organizational managementperspective. There is need for the managers to manage risks andopportunities of using solar power as an alternative source ofenergy. Enterprises depend on solar power to reduce utility costs,ensuring energy security and to have energy independence from publicutilities. Opportunities presented by this dependence are improvedefficiency and increased profits while the risks include equipmentbreakdown and weather uncertainty. Using solar power helps thebusinesses to save on power costs and solar installations are a longterm investment. As such, the businesses have an opportunity toembrace the ecology to save operational costs, and the risk involvesis uncertainty about reliability of the components and thetechnology. Through this effort, the businesses earn a “green”label for their organizations and slow down global warming. Theopportunities presented through this is marketing advantage, whilethe risk involved is possible stakeholder dissatisfaction. Managerscan use renewable sources to realize new business opportunities andrisks, and strengthening their positions in business competition. Thepaper demonstrates the significance of solar power with assertionsthat it is unquestionably one of the most worthwhile explanation tothe environmental issues as regards to energy utilization. In thisregards, the paper shows that people need to understand the elementsinvolved as well as understand the imperative of reducingoverreliance on renewable sources of energy, principally fossil fuel

Business management of risk and opportunities of solar power

In the past few eras,individuals have raised foremost concerns about thegreenhouse gas effect, which has facilitated the need for reducingthe carbon footprint (Armaroli &amp Balzani, 2011 Bolton, 2012). Asa result, several businesses have resorted to utilizing renewableenergy as alternative sources of energy. Solar energy is an essentialsource of energy, which equally has the potential to provide powersupply enough to sustain even large commercial businesses. Recentdevelopments on solar technologies continue to support the increaseof power generation in an exponential rate. As a result, the focus onthis important source or renewable energy has led to the increase ininvestments in the same. While tapping into the opportunities thatare presented by solar energy, there are some risks that areassociated with exploiting it. This discourse assesses the need forbusiness managers to manage risks and opportunities of solar power.

Howenterprises depend on solar power

Changingrelationships with public utilities

Many of the businesses that are utilizing solar energy get anopportunity to changing relationships with public energy utilitiessuch as line power. One way they get to do this is that they reduceutility bills, such as costly line power connections and maintenancefees. According to Yamamoto (2012), the value of solar is not likenet metering. In net metering, producing energy reduces a business’electricity bill by simple controls such as turning off the light.The value of solar power includes components such as elimination ofthe environmental cost, distribution capacity and fuel cost.

Energysecurity

Contrasting other motifs of energy such as fossil fuel and power-lineelectricity, solar power is an uninterrupted source of energy (Buchliet al., 2014). This is because there is guaranteed energy fromthe sun every day, despite the fact that some days may go by withoutstrong sunlight. At the same time, the energy that is harvested fromthe sun from the installed solar panels can be stored to cater fordays which have low sunlight. Additionally, incidences such as powercuts from unsettled bills are avoided by utilizing solar energy.

Energyindependence: Less dependence on public utilities

Businesses have an opportunity of reducing dependence on other publicsources of energy by using solar energy. By having solar panels, abusiness generates its own source of power, which it can also exportto other users. Additionally, dependence on the government togenerate energy for the public is reduced, meaning the businessesbenefit from not having to pay excess taxes for electricityconnection to the public grid.

Opportunitiesand risks for businesses

Opportunities: Improved efficiency of natural resource utilizationand increased profits from power costs savings.

Risks: Equipment breaks down and weather uncertainty.

Operatingcosts

Costsaving

Perhaps the biggest advantage of solar energy is that there is animmediate relief from spending on other sources (Kalogirou, 2013). Nomatter the size of the installation, a business is definitely set tobegin receiving smaller utility bills than before. Additionally,given that it solar energy is a modular technology, a business caninstall as many panels as it wishes, meaning that it has the controlof the bills that it will be receiving from using other sources ofenergy. According to Wustenhagen &amp Menichetti (2012), solarenergy is an investment which pays increasingly large dividends everypassing year. A study demonstrated that the average solar systemcosts over a certain period and electricity savings over the sameperiod helped to reduce the power cost for a given business.

Longterm investment

Solar panels are a long-term investment for businesses. One of themost common questions by businesses looking to invest in solar panelsis the longevity period of the panels, which is their lifeexpectancy. According to government regulations and manufacturerstandards, the warranty conditions of solar panels is typicallyguaranteed that they can at least produce 80% of their initial ratedpeak output, which is normally 25 years (Branker et al.,2011). This means that the businesses do not have to change thepanels for at least two decades and that the efficiency reduces atless than 1% per year. With the recent developments in solar energy,manufacturers are now coming up with solutions to overcome majorhurdles of solar installation, such as technology for high efficiencyand longer lasting cells. Such technology includes self-cooling andself-regulating systems, which have been developed and utilized inthe developed countries. The graph below shows a solar power warrantycomparison for a number of solar panel technologies.

Figure1: Source (High Informative, 2014).

Risksand opportunities

Opportunities: Embracing ecology to save operational costs for thebusiness.

Risks: Reliability of components and technology.

Environmentalimpact

Earningthe “Green” label for the company

In the contemporary business world, one of the major aims of businessoperations is earning the “Green” label (Zuo &amp Zhao, 2012).This is because the label is positive for corporate socialresponsibility and public relations purposes. By using electricityfrom the solar power, businesses reduce dependence on fossil fuel.This automatically reduces greenhouse gas emissions and reducedenvironmental pollution. Businesses, therefore, have a chance ofexpressing their participation in the battle against global warming,and reducing the dependence on foreign sources. The Green label isalso a powerful marketing tool and most financiers and stakeholderslike identifying themselves with environmentally aware businesses. Inreturn, business profits increase and businesses’ market shares goup.

Slowglobal warming

The rate of global warming is always increasing. This is because ofthe increased global industrialization and use of fossil fuel, whichincreases the global carbon footprint. Masson et al. (2014)did an empirical research to assess the reduction of global warmingby use of solar energy. There are two ways in which use of solarenergy reduces the global carbon footprint, direct and indirect.Directly, the use of solar energy reduces dependence on uncleanenergy sources, principally fossil fuel, hence cutting the amount ofgreenhouse gasses that are released. Structuring and installation isthe indirect contribution of solar energy to reducing the carbonfootprint. For one to appraise the impact on the urban weather, theresearchers parameterized their effect within the surface schemes,which were coupled with atmospheric models. The results were that bysolar panels, by producing shade to the roofs, reduced the need forair conditioning by about 12% (Masson et al., 2014).

Risksand opportunities

Opportunities: Marketing the business by embracing environmentalawareness and securing the future through ecological consciousness.

Risks: Risk of dissatisfied stakeholders as regards to enterpriseimage and “green” labeling, given the stiff industrialcompetition for recognition for environmental awareness.

Ways that businesses are affecting the renewable resources

Abuse

One of the main concerns about utilizing renewable sources of energyis saving the power that is generated from it (Bose, 2013). There isneed to store the surplus energy for use in times when the logisticsfor harvesting the energy using similar means are not satisfactory.For instance, there are areas that receive sunlight in terms ofseasons. Such areas experience up to months of poor sunlight when theseason is off-peak. As such, should there be no power that was savedprior to the low sun season, the solar panels that are installed arerendered useless. Additionally, there are no clear governmentregulations as to the use of solar energy, as it is regarded as afree source. The lack of regulatory and ideological capacity for fairusage may give some huge businesses an unfair advantage over others,regarding the installation of solar panels and harvesting of thesolar power. This is a major concern, given that geography comes intoplay when setting up large solar installations.

Useof a certain source of renewable energy, in this case, solar energy,has other far-reaching implications for the ecological equilibrium.For instance, there is documented devouring and defacing oflandscapes to pave way for solar tapping, which has tragicimplications for ecological balancing. The use of prime agriculturallands and important wetlands for vast solar field installations hasbeen described as economically shortsighted and thoughtless by theRutland Herald Organization (2014), which further asserts that thereis need for substantial environmental and ecological accountabilityfor the same. As such, businesses abuse solar power and along withit, bring imbalance to the ecosystem.

Utilizing

Solar energy has been an economical and environmental awarenessdevelopment since its discovery. As such, there are businesses whichare dedicated to and have invested in tapping solar power. Somebusinesses use their rooftop solar panels to generate their ownpower, and sell the excess to the local electric utility grid. Forinstance, a quarter of the more than 100,000 owners of rooftop arrayowners in Arizona sell about half of their power to the local grid(Biello, 2015). Therefore, the masses have found a way of utilizingthe benefits provided by the ecosystem to make money. It is projectedthat business from providing solar energy to the local power grids byindividuals is set to increase in the approaching years, reducingmonopoly by grid power providers and governments.

Howusing renewable resources can help managers to avoid environmentaland business risk

Realizingnew business opportunities and risk

Usingrenewable sources of energy, businesses do away with power costs fornon-renewable sources of energy. For instance, by using solar energy,the business owners either pay less for energy from the public powergrid or totally do away with such costs (Amaroli &amp Balzani,2011). This is solar energy is free for all, and there are no limitsas to the amount of energy that one can harvest. The businesses alsosatisfy some business operation objectives such as maintaining a goodpublic image, which attracts customers and keeps the stakeholders andinvestors satisfied. Additionally, by identifying risks such asinvestment costs for renewable sources of energy, the businesses arein a position of developing mitigating strategies, which can beincorporated into organizational operations and thus securing thefuture.

Thepublic and the government recognize businesses, which have investedin renewable sources of energy (Solangi et al., 2011). As such, theyare in a position of taking part and influencing government decisionssuch as power regulation and environmental policies. By doing so, thebusinesses increase profits and their operations by avoidingliabilities such as tax fines and environmental protection fees.Additionally, the management can foresee the energy consumptiontrends and strategize in time for new markets in their respectiveindustries.

Finally,managers of businesses, which utilize renewable sources of energy,are in position of strengthening their management methods in thecontemporary business environment. Solangi et al. (2011)asserts that utility costs are part of determinant factors of thesuccess of operations management in any given company. Usingrenewable sources of energy helps the operations management to laydown policies for power utilization, helping the organization to saveon unnecessary utility costs.

Conclusion

Solar energy is unquestionably one of the most viable solution to theenvironmental issues as regards to energy utilization. As such, notonly homeowners, but also commercial businesses have joined in thefight to reducing the global carbon footprint by reducingoverreliance on renewable sources of energy, principally fossil fuel.While at it, business managers have been put on the highlight inidentifying opportunities and risks that are come along with usingsolar power. This is the reason why the managers have to come up withstrategies and frameworks for identifying and managing these risksand opportunities. In doing so, the businesses will be in a positionof maximizing the benefits of using provided by the ecosystem throughtapping solar power and mitigating liabilities from the same. At thesame time, developing entirely new business opportunities andexpanding the market is part of the collective ecological assessmenton using solar energy as an alternative source of energy.

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