Business sustainability and environmental impact have rightfully gained a growing prominence, but a frustrating anomaly has left the handbrake on during this progress. Despite Australia being the global epicentre of abundant renewable energy, it’s historically been big businesses spending $2M+ on energy who can take full advantage of it. While that’s great news for the big players, it’s a little like the “rich get richer…” where small businesses are concerned.
This dynamic is finally changing and as is often the case, we have technology to thank. An innovative application of blockchain has solved the imbalance and the door to direct purchasing of renewable energy has finally been busted open for small businesses.
In Australia, Power Purchase Agreements (PPAs) have become the vehicle for businesses to tap into renewable energy by agreeing to a sizable power offtake, typically consisting of solar and wind-generated power. This is where the $2M threshold would come into play, effectively making direct purchasing of renewable energy a non-starter for small businesses. The traceability of blockchain technology, however, enables these large deals to be broken down, “tokenising” that power as a usable offtake itself, while still being linked to the larger source it was taken from. This effectively brings the cost down as low as $100k – a game-changer for small businesses. The addition of standardised contract architecture means that deals can be conducted with multiple smaller businesses buying together, without needing to engage specialised legal consultants to facilitate the deal.
Access to renewable energy brings considerable benefits to small businesses. Renewable energy is cheaper to produce and has been shown to deliver cost savings as significant as 30 per cent. That’s a considerable business benefit in any situation, but when you consider the uncertain COVID-19 landscape that businesses are operating in right now, it could prove to be a business-saving cost reduction.
Renewable energy procurement goes a long way to driving a business’ sustainability program and reducing impact on the environment. It not only creates a positive brand image but is an engaging customer consideration that could prove the decider in securing sales and new business. Millennials and Gen Z are particularly interested in purchasing from green and sustainable companies. As they become a larger portion of the buying population, marketing strategies built upon renewable energy commitments could well win over these coveted audiences.
The launch of Amazon’s recent $2 billion climate change fund is a benchmark example of the importance renewable energy now has in business. There is however still work to be done, even with programs of this magnitude and an opportunity presents itself here for small businesses to lead from the front. As significant as Amazon’s investment is, it maintains the lack of transparency and traceability to its claims that small businesses utilising the blockchain solution have at their disposal. Public blockchains eliminate any margin of error or uncertainty as to where renewable energy originated from. Small businesses using this technology to access renewable energy now also have the inherent ability to back sustainability claims with statistical confidence and blaze a path for larger businesses, even those the size and significance of Amazon, to follow.
We hear on a daily basis how ‘testing’ these times are. Finally having access to renewable energy is a shot in the arm for businesses when they most need it. Beyond the bottom-line benefits, businesses using renewable energy have a positive environmental impact, enhance their brand perception and create an affinity with customers. With so much to be gained, it’s time for Australia’s small businesses to embrace blockchain, reap these renewable benefits and drive transparent, traceable sustainability.
Nick Martyniuk, CEO, WePower