5 Easy Steps for Starting an Energy Business

Creating an energy business should be based upon economic assessments, financial capability, knowledge, skills, and experience. Let’s take a look at the 5 steps you’ll need to build a successful energy company.

Creating an Energy Company

It may be hard to believe that developments related to the use of alternative energy appeared back in the 18th century. It was at that time that the French engineer Bernard Forest de Bélidor laid the foundation for hydraulic engineering. This was followed by descriptions of the photoelectric effect and the creation of the wind turbine. A patent for a plant that extracted energy from sunlight was first obtained 160 years ago!

Such inventions, even though they were breakthroughs, were only introduced into life on a minimal basis. Today, however, we are seeing a real boom in the transition from theory to practice in terms of alternative energy sources.

A stable demand for alternative energy sources has formed a favorable market environment for new businesses. Let’s take a look at the five main steps to opening a clean energy company.

Choose Direction

First of all, to draw attention to yourself immediately, you should think about what you can do better and more profitable for the consumer. Learn the renewable energy sources, and choose which one you want to use.

Let’s take wind farms. It’s important to know that the most crucial thing when constructing a wind farm is the right location. For instance, in Mongolia, the wind blows on a daily basis. That’s why Karvuon is creating a clean power plant in that country. It is also necessary to conduct preliminary two- to three-year wind monitoring in order to be sure of the chosen place.

It is necessary to take care of the paperwork for the selected location as early as possible because many promising sites in attractive energy centers are already occupied by investors who have received technical specifications but are in no hurry to implement their projects. In addition, you should take care of logistical nuances, because the delivery of blades for windmills can be a difficult task given their huge size.

Explore the Market

The information scientists have been collecting for more than five years has allowed them to arrange potential energy sources in the following order (by expected efficiency for producing alternative fuel):

1. Wind farms
2. Concentrated use of solar energy (mirror systems that allow conversion of energy from the sun into steam energy)
3. Geothermal energy sources
4. Tidal power plants
5. Solar panels (converting energy from the sun into electricity)
6. Power plants that use energy from ocean waves
7. Traditional hydropower plants
8. Different types of biofuels
9. Nuclear power
10. “Clean” coal

The study took into account not only the economic side associated with energy production but also the potential volume of greenhouse gasses emitted into the atmosphere and the environmental impact of its use on an industrial scale — for humans and the environment.

As a result, wind power has taken the leading position, and biofuel, which has become so fashionable recently, appeared at the very bottom of the list — only slightly ahead of nuclear energy and “clean” coal. As it turned out, the active use of ethanol-based biofuels does more harm to the environment than traditional fuels already in use.

The newest technological novelty is the use of so-called “clean” coal — more precisely, the process of burning coal with the simultaneous selection of carbon dioxide and its concentration in underground storage facilities with subsequent utilization. According to comparative studies, the construction and provision of relatively environmentally friendly “clean” type coal-fired power plants will nevertheless lead to 110-fold (compared with wind energy complexes) initial environmental pollution.

source: Greenpeace

Make a Business Plan

A modern financial planning system should ensure optimal management of the energy company. Based upon the established system of balanced indicators and taking into account strategic financial goals, this system should help to anticipate situations in the energy company according to patterns and trends of function and development.

The energy company’s business plan can be formulated as follows:

1. Application of strategic financial planning, taking into account expected changes in the external environment as well as external and internal risks.
2. Application of key performance indicators of the energy company.
3. Planning protective actions and interactions to compensate for real threats associated with lobbying the interests of large electrical consumers in regulatory bodies.
4. Optimization of plans and production programs, taking into account the strategic interests of the owner according to financial, economic, and investment criteria.
5. Providing a link to a system of responsibility centers, hierarchy, and financial control.
6. Adequate reflection upon processes addressing change in organizational structure and management.

Implementation of these business principles and planning within the framework of the energy company’s financial plan will allow the formulation and implementation of a long-term development strategy to achieve financial stability.

Analyze

You will have to repeat this stage over and over again throughout the life of your business. Few can take this step, even among experienced entrepreneurs. And that is their big mistake. Carrying out analysis and researching data, you will understand what works and what you should not waste time and resources on. When there are mistakes, figure out what can be done better or in a completely different way. In this way, you will not miss the opportunity to increase your customer base while optimizing costs.

Be Attractive for the Investor

The attractiveness of a business in the field of electricity and heat is determined by owner assessment (investors) of potential opportunities for realizing their goals (mainly financial). This is expressed in indicators such as:

• inflow/outflow of investments in the industry
• frequency of change of ownership in major businesses (generation, transmission, marketing)
• share of private business in the turnover of electricity.

Attractiveness ratings differ by type of business, and are formed by taking into account the following main factors:

• requirements for products/services: functional purpose and quality characteristics
• expected return on investment
• the nature of the demand for a product/service
• type of activity (monopolistic, competitive)
• market entry conditions
• risk.

After studying nuances and theory, you can begin to actively promote your services to the population. Your clients are farm owners, private households, the food industry, cottage industries, and homeowners. Your assistants in the promotion of services are the sun, environmental friendliness, and independence from the cost of classical energy sources.

Solar Microgeneration

Since ancient times, the energy of wind and water has helped humankind by turning mill wheels, fanned blacksmiths’ fires, and sailed large ships. If this energy is only used locally, where it is found in the required quantities, then the sun is available almost everywhere. In addition, new, inexpensive, highly efficient technologies for collecting and processing solar radiation into electricity or heat make the energy of the sun available to a wide range of people.

Currently, the transition to solar panels has become a popular service for both individuals and large organizations. In many countries where the sun shines year-round, solar energy is firmly established in the everyday life of consumers. There are entire cities powered by solar energy only. In many countries, this procedure is supported by the government. In Spain, since 2007, all new homes have been equipped with solar panels to heat water. This approach meets up to 70% of the demand for hot water. And new non-residential buildings must have solar equipment for the production of electricity. In Germany, all active users of solar panels receive subsidies from the state. In Mongolia, there are over 300 sunny days per year. That’s why it’s the perfect fit for the mining farms Karvuon is creating.

The popularity of solar microgeneration stems from its indisputable advantages:

• Solar energy is the purest and safest energy.
• Modern equipment is available for domestic use and is easily mounted in existing engineering networks.
• The equipment has a simple device, but at the same time, it is almost completely automated, in comparison with equipment working from other energy sources.
• This type of equipment has a maximum life cycle but doesn’t require regular expensive maintenance.
• The equipment can be easily placed in any architectural solution without “damage” to the technical properties of the building.
• There are also original solutions that allow solar stations to be equipped, from buses to small boats, yachts, and ships.

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