This past year, we’ve seen the extent to which geopolitical struggles can cause energy markets to become unstable. Given that approximately 82% of the world’s energy comes from fossil fuels in 2022, as per the UK-based Energy Institute’s report, the energy industry is at a pivotal moment where environmental and energy sustainability considerations are converging with concerns over energy access and affordability.

Energy security has long been an issue for emerging markets. Now, it’s an issue for everyone. Industry players from around the world are being forced to consider new energy systems, and the time is right for investors to truly take note of renewable energies as a dependable option in the pursuit of stability and growth.

The cost of instability 

While Europe is poised to see their energy demand outstrip supply by 21%, by the end of 2023, American businesses are expected to pay over US$41bn more for energy costs.

A shortage of energy supplies sees an ensuing rise in costs for all energy users. In addition, businesses that are overspending on energy will drive up their prices to pass on those added expenses to consumers. In the end, the general population shoulders much of the burden when the cost of all products rises, from food to electronics, and the drive-up of inflation further fuels fears of recession. 

Beyond this immediate impact, there’s a second round of effects, which has to do with the production of energy-intensive products. To manage the profitability of these, production levels may decrease, which then creates supply chain shortages or disruptions. 

Increased prices for oil and gas, therefore, affect everything from consumer spending and job growth to business investments and the allocation of resources.

Sustainability beyond the environment

Instead of hoping to see oil and gas prices drop, it’s time to imagine new energy market dynamics and accelerate the clean energy transition. 

Implementing renewable energies to power different production processes can help countries lower energy costs whilst tackling climate change, in addition to building resilience. 

Indeed, if energy security is about building long-lasting, affordable access to power sources, the current geopolitical and energy market realities are calling for us to move away from unreliable suppliers. 

The ultimate goal is for energy security to be sustainable – in every sense of the word. No longer should sustainability be associated with sacrificing profits, because the ultimate reward is building resilience against volatility. Beyond the very pressing need to care for the environment, it’s also important to recognize that energy strategies are most beneficial when they take a diversified approach.

Economically, dependency on one source of fuel is not a long-term, risk-free solution. 

“Governments should boost investment in renewable energy sources that are increasingly competitive, moving away once and for all from the current outdated carbon-intensive and unsustainable economic model.”
Lord Nicholas Stern, co-chair of the Global Commission on the Economy and Climate (source)

How to be proactive by securing PPAs

One way of mitigating the uncertainty of energy prices is by securing a renewable power purchase agreement. Given that suppliers can increase their rates at any given time, purchasing energy outside of a fixed-rate contract leaves businesses vulnerable to price fluctuations. PPAs offer the benefit of procuring energy with contractually fixed rates, which functions as a safety net against inflation.

However, the strength of PPAs is also in their ability to offer diversified energy portfolios, to meet the needs of each client according to their particular energy use patterns.

PPA’s can be tailored, as we’ve discussed before. Moving away from a “one-size-fits-all” mentality regarding energy procurement allows businesses to make strategic choices that are data-driven, and it’s one way to make energy a more fixed and controllable cost.

PPAs are widely accepted in the US, Europe and Scandinavian markets. Recently, there has been a growing trend in Latin America, with the support of corporate partners, committing to long-term PPAs.While private PPAs were originally pioneered by data centers that needed large amounts of energy and resources to operate, PPAs are no longer limited to a certain type of business or geographical area. In fact, it is now common for companies across industries to be conscious of their energy sources, costs, and carbon footprint. Large banks, retailers, restaurant chains, and telecommunications companies have all widely published details of their PPAs.
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Collective effort, global solutions

Moving away from conventional energy sources may, initially, lead to hesitation. After all, most energy infrastructure around the world caters to gas, oil, and coal, and renewable energy technologies are still in development. However, as they stand now, renewables are already the most cost-effective. More so than oil, gas, and coal, and more so than nuclear power.

The level of investment that’s required to create stronger access to renewable energies, calls for dedicated collaboration among companies and nations. Collaboration across private and public sectors and industries will be necessary, as it’s the only way to ensure innovation and growth at the scale and speed necessary to meet global sustainability goals. Not to mention that improved technologies also lead to reduced costs, and take us one step further to the development of larger, full-scale projects that function across borders, and take us closer to creating a secure energy landscape.

How the Atlas sustainability model offers increasing returns 

According to research conducted by Accenture, “energy companies that achieve better financial performance seem to be the ones paying greater attention to environmental, social and governance (ESG) metrics. While it’s too early to attribute causation, a correlation appears to be emerging between ESG performance and better stock prices, lower cost of capital and higher shareholder returns.”

Our commitment to environmental sustainability cannot be seen as separate from our commitment to social development. Of course, the triple bottom line by which we operate puts profit alongside people and the planet. It’s only by considering ESG metrics altogether, however, that we can measure the true increase in returns, and we, at Atlas, believe that it is possible to create a business model that generates profit whilst being a force for good.

When we invest in people, we know we are creating a stable foundation that will sustain our long-term vision and day-to-day operations. The intangible benefits of creating credibility cannot be overlooked. And no other form of energy, other than renewable energy, can count on a level of credibility among consumers who, worldwide, are more and more interested in sustainable energy sources. 

The road to stability

Although the current crisis response has been to focus on short-term solutions, which include increasing oil and gas production to tackle fuel shortages, we believe it’s imperative to start thinking about long-term strategies.

Atlas is always willing to assist companies ready to move towards new energy processes, ones that are focused on diversification as a way of fostering both sustainability and security.

In partnership with Castleberry Media, we are committed to taking care of our planet, therefore, this content is responsible with the environment.

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