Do you want to start a renewable energy business? If YES, here is a complete guide to starting a renewable energy business with NO money and no experience.
Okay, so we have provided you an in-depth sample renewable energy business plan template. We also took it further by analyzing and drafting a sample renewable energy marketing plan backed up by actionable guerrilla marketing ideas for renewable energy businesses. In this article, we will be considering all the requirements for starting a renewable energy business. So put on your entrepreneurial hat and let’s proceed.
Table of Content
- Why Start a Renewable Energy Business?
- 1. Understand the Industry
- 2. Conduct Market Research and Feasibility Studies
- 3. Decide Which Niche to Concentrate On
- 4. Know Your Major Competitors in the Industry
- 5. Decide Whether to Buy a Franchise or Start from Scratch
- 6. Know the Possible Threats and Challenges You Will Face
- 7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
- 8. Choose a Catchy Business Name
- 9. Discuss with an Agent to Know the Best Insurance Policies for You
- 10. Protect your Intellectual Property With Trademark, Copyrights, Patents
- 11. Get the Necessary Professional Certification
- 12. Get the Necessary Legal Documents You Need to Operate
- 13. Raise the Needed Startup Capital
- 14. Choose a Suitable Location for your Business
- 15. Hire Employees for your Technical and Manpower Needs
- 16. Write a Marketing Plan Packed with ideas & Strategies
- 17. Develop Iron-clad Competitive Strategies to Help You Win
- 18. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
Why Start a Renewable Energy Business?
Building a lucrative renewable energy business is not just a profitable business; it is also one way of tackling the need for positive change in terms of energy sources and to support the use of alternative sources of energy. In this present age, energy is getting scarce and expensive and to take advantage of that fact, you need to start your own renewable energy business.
Indeed starting a renewable energy business needs no initial costs or fees but you need to educate yourself so that you can educate your clients about renewable energy. When planning to start a renewable energy business, you don’t need to be a college graduate or a marketing and sales expert. What is important is having a heart for alternative sources of energy.
The growing air pollution has made governments and ecologists encourage the use of non-conventional energy sources. Also since clean energy has been used for almost everything, from generating electricity to heating water, it has created new and massive business opportunities for green energy entrepreneurs. Starting and running a renewable energy business can provide a lucrative opportunity to participate in this growing sector, while providing a better solution to limit the dependence on depleting reserves of fossil fuels.
However, to be able to create green energy, this business needs focused entrepreneurs who with their innovative ideas, quick action and willingness to take risks, can reap generous profits from the production and sale of energy. Indeed there are countless entrepreneurial opportunities in the energy space; the biggest challenge is to make them viable. Big scale opportunities using wind, solar or biomass require significant global investments in promoting hi-tech solutions and establishing new business models, making it hostile for startups with financial issues.
Starting a Renewable Energy Business – A Complete Guide
1. Understand the Industry
Renewable energy includes energy gotten from natural processes that do not involve the consumption of exhaustible resources such as fossil fuels and uranium. Hydroelectricity, wind and wave power, solar and geothermal energy and combustible renewables and renewable waste (landfill gas, waste incineration, solid biomass and liquid biofuels) are the constituents of renewable energy.
Indeed the coverage and quality of data relating to non-hydro renewable power is growing steadily, especially where countries have adopted policy targets for renewables. Currently, it is very much possible to provide a reasonable estimate for total power generated from renewable sources.
Even with high growth rates, renewable energy still represents only a small fraction of today’s global energy consumption. Renewable electricity generation (excluding hydro) is believed to account for nearly 8% of global electricity generation. Renewables do, however, play a significant role in the growth of electricity, contributing almost 40% of the growth in global power generation in 2016.
It is very necessary to state that at the individual country level, these sources are already playing a crucial role in some countries. Denmark leads with 59% of power coming from renewables. Among the larger EU economies, the renewables share is 26% in Germany, 25% in Spain, and 23% in both Italy and the uk. Fast and incorrigible growth of renewable power generation continued in 2016, with an increase of 14%. In volume terms, the largest increase in 2016 was in China, followed by the US; with Japan, india and Brazil making up the rest of the top five.
There are several opportunities at all stages of the ladder in the supply chain of renewable energy. With the rapid growth of solar water heating in urban areas, solar UPS and solar street lighting are now picking up. Moreover, making of small scale wind energy and hybrid plants is also taking steady pace all around the world. The bio fuel industry, which is already a $2 trillion industry, for making cleaner fuels, is also ready to welcome entrepreneurs.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
When planning to start this business, you need to select your target consumer, execute and implement your marketing and business plan. Immediately you secure necessary funding and establishing start up logistic supports, you have to engage your target consumer for generating sales, and you can’t do that if you know nothing about them.
In order to get potential customers, research local demographics, communicate with construction companies, consumers, homeowners, landlords, school districts and other organizations so that you can provide them your renewable energy services as per their requirements.
There is a current global need for clean and renewable energy sources. Fossil fuels are non-renewable and require finite resources, which are dwindling because of high cost and environmentally damaging retrieval techniques. So, the need for cheap and obtainable resources is greatly needed. This growing need has created an opportunity which when explored properly can yield multiple rewards.
The demographic and psychographic percentage of individuals who need renewable energy cannot be overemphasized. Sustainability has been a key word, being analysed and talked about in every corner of the world. The need to create a clean and durable environment has filtered into all ages and sectors of the population. In this business, everyone is a potential customer.
3. Decide Which Niche to Concentrate On
Indeed this industry is huge, which is why you need to determine what kind of renewable energy business you will be starting. There are various types of business opportunities in the renewable and green energy business with different visions, missions, expenses and operational strategy. They include:
- Bio-fuel production
- Power storage systems
- Photovoltaic systems
- Consultancy services
- Repair and maintenance
- Energy auditor
- Geothermal power
- Solar panel sales etc.
The Level of Competition in the Industry
Right from photovoltaic solar panels to kinetic energy adapters for stationary bicycles that generate electricity from pedaling, entrepreneurs are taking advantage of the green revolution by finding renewable energy solutions. Since we use energy for almost everything, the recent trend towards greener, more sustainable technology is creating many opportunities for entrepreneurial-minded individuals.
We believe that as global population rises, the reality of finite resources is also growing. The earth’s energy requirements cannot rest on fossil fuels forever, and although advances in technology allow us to tap into reserves that were inaccessible in the past but it won’t last forever.
All these concerns, along with the negative impacts of burning fossil fuels, have created an environmentally and socially conscious mind set amongst different sets of economic actors, including consumers, investors, firms and governments. Firms and investors looking for profits have taken advantage of consumer interest in cleaner energy alternatives and government-incentivized greener business initiatives.
Also political instability in regions like the Middle East have set many nations on a quest for energy independence and security. Solar, wind and geothermal energy sources can be tapped into from essentially anywhere in the world – at least in varying degrees – thus offering the hope of energy independence and security. With these factors driving the shift towards renewable energy, now is the time to start looking for opportunities to help solve the world’s energy problems and, perhaps, make money.
4. Know Your Major Competitors in the Industry
With rapid growing publications about renewable energy, the need for energy and the major depletion of resources over the years, major companies are trying to balance this ratio with renewable energy. With growing population and the progressing economies, it is no surprise developing countries like India and China at the forefront of this industry. Well-known companies in this industry may include…
- First Solar
- NextEra energy
- SolarCity Cooperation
- Hannon Armstrong
Indeed there are vast opportunities for implementing innovative renewable energy solutions. But the best place to start looking is in your own area of expertise. Start by thinking about the industries you have worked in and consider how renewable energy could benefit them.
You don’t have to forget that becoming a renewable energy entrepreneur doesn’t mean you have to build your own wind farm or hydroelectric dam. Renewable energy is more than just electricity generation; it is also about storage, conservation and distribution.
You also don’t need to invent a new product or technology, as you can choose to get involved in installation, repair/maintenance or consulting. Think broadly, and remember your areas of expertise when doing it. We suggest you talk with friends, family, and colleagues as they will help push you towards ideas for things people want or need. A lot of people build a business around an idea and then try to sell that idea rather than building the business around something people already want to buy.
Even with all the hype about environmental sustainability, there are facts suggesting that green consumers are still looking for the same things most consumers want: individual benefit at a low cost. Also know that consumers are not the only group that one needs to consider when looking for the right opportunity.
It is important that you also think about how the product and service will affect or be affected by other actors, such as suppliers, the government, the competition and financing organizations like banks. All of these actors could have an impact on the success of your business.
5. Decide Whether to Buy a Franchise or Start from Scratch
You need to learn about the industry, its available products, trends and ideas before you venture into it. To succeed in this business, you have to create relationship with suppliers, along with a source of in-depth information for the questions the business owner can ask and answer. The easiest and most cost-effective way to ensure all of the foregoing is to buy a franchise, as the entire Business model is already created, the kinks are worked out and the business is essentially ready to go.
For success in this business, we suggest you research various renewable energy franchise opportunities and select a franchise to work with. This way, the business model, including the business plan, and advertising media and materials are all ready-made. We also suggest you build a relationship with the chosen franchise and get as much information as possible about the way the business is operated, the start-up capital required and the process of becoming a franchisee. You can accept the business plan provided by the franchise, or create a fresh business plan.
6. Know the Possible Threats and Challenges You Will Face
The earth’s sources of energy are becoming scarcer and increasingly expensive and eco-friendly green living is becoming more essential than optional. This is why a renewable product or energy business can be a lucrative idea that does our environment some good as well. Many renewable energy businesses require no start-up fees or formal training, but do have few challenges.
- Getting adequate training
- Registering your business and getting a certification
- Choosing a suitable name
- Legal issues
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
- Best legal entity to use for this type of business
Forming your business as an LLC especially in the renewable energy industry is an option you should seriously consider because it can protect you from personal liability if something bad happens. If you are planning on Setting up an LLC for your business, you can file for your authority at the same time the LLC is being formed.
Indeed an LLC is one of the most popular business forms available, and for good reason. Limited Liability Company has many advantages including workplace benefits. Below are some of the primary benefits an LLC can offer your Renewable energy business.
- Limited Liability
- Pass-Through Taxation
- Determine Your Own Structure
- All Members Can Be Involved
- Build Business Credit
- Attractive to Foreign Investors
8. Choose a Catchy Business Name
Thinking of a catchy name for your renewable energy company and filing it with the county as a fictitious business name or your business name is a very unique step to starting your business. While this step is not essential, it will allow you to write checks, conduct financial affairs and advertise using the name of the company, rather than your personal name. You can choose any of the following names;
- Gallant Energy Corporation
- Argo Systems
- Element Energy
- Bliss Electric Inc.
- White Dolphin Energy Co.
- Yellow Sun Energy
- Zurich Corporation
- CenterPoint Energy
- Clean Currents
- Preservation Energy Group
- Crown Energy
- Baron Energy Corporation
- Direct Energy
- Vast Energy
- Duke Energy
- Edison Mission Energy
- Walters Energy Company Inc.
- Flint Inc.
- First Energy Corporation
9. Discuss with an Agent to Know the Best Insurance Policies for You
As the reality of global warming constantly dips into our consciousness, there is a growing desire for consumers to be supplied with renewable energy and to reduce our dependency on electricity generated by fossil fuels. In recent years, the message has now been received by governments who are encouraging the growth and development of renewable energy projects. With the expansion of renewable energy infrastructure comes the need for specialist insurance cover. The insurance you need to consider may include…
- Renewable Energy Insurance
- Handy Tips for Community Renewable Energy Groups
- Community Renewable Energy Insurance
- Community Hydro Insurance
- Community Solar Insurance
- Community Wind Turbine Insurance
- Small Scale Community Renewable Energy Insurance
- Small Scale Renewable Energy Insurance
- Hydro Insurance
- Solar Insurance
- Wind Turbine Insurance
- Environmental Impairment Liability
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
Innovation is important for the fast deployment of renewable energy technologies. Protection of intellectual property rights is a priceless instrument to promote innovation. Intellectual property rights refer broadly to the ownership of intellectual findings, including industrial, scientific, literary and artistic work. Patents, which are part of IPR, provide ownership rights for technology inventions for a certain time period and within a certain jurisdiction.
By protecting technological development and market introductions, patents stimulate further innovation. Patents are also a rich source of information for technological inventions and innovation, which can be used to assess developmental trends and future directions of technologies.
11. Get the Necessary Professional Certification
Professional certification is a systematic process which proves that a person has the knowledge, experience, and skills to perform a specific job. The proof comes in the form of a certificate earned by passing an exam that is accredited by an organization or association that monitors and upholds prescribed standards for the particular industry involved.
In the renewable energy industry, having professional certification gives your intending customers the fulfillment that they are knowledgeable and that you are worthy of their patronage. Listed below are few professional certifications in the industry.
- Renewable Energy Professional (REP™) certification
- AEE certification
- SEI Solar Professionals Certificate
- Residential and Commercial Photovoltaic Systems Certificate
- Battery-Based Photovoltaic Systems Certificate
- Solar Business and Technical Sales Certificate
- International and Developing World Applications Certificate
- Renewable Energy Applications Certificate
12. Get the Necessary Legal Documents You Need to Operate
Immediately you have had an idea, made a plan and figured out how to finance your business, you are on your way to becoming a renewable energy entrepreneur – though the work has just begun. Now you are going to have to convince clients to spend money on your product or service instead of alternatives. It won’t be an easy task, but it can be very rewarding, especially since, with renewable energy, you are sustaining your livelihood as well as that of people all over the world for many generations to come.
Don’t forget to check with your local governing agencies, such as the secretary of state, county commissioners or city council to determine what – if any – types of business licenses and permits you need to legally operate your business. Business license regulations vary from state to state, but no matter where you operate, the IRS needs to know that you have an employer identification number to claim your earnings and pay your taxes. You can apply for an EIN by visiting the IRS website.
13. Raise the Needed Startup Capital
Every business succeeds or fails on the basis of its ability to sustain itself financially, but it could take some time before revenues are large enough to cover costs. But a number of financing options for new businesses and start-up’s exist.
Experts believe that almost 90% of entrepreneurs invest some personal savings at the early stages of their business and over 74% said that personal savings were the primary source of initial financing. By making use of your own savings, you might also serve to show other potential investors that you are serious about the future of your new venture.
You can also try to find external financing from banks, venture capital or the government. But, the first two options may be harder to obtain in the early stages as they will want to see an existing company with strong growth potential before giving over their money.
While it can take some time to receive approval and not all businesses are eligible, government funding could be a good way to go given the numerous incentives for cleaner, more sustainable technologies and services. Ways you can raise funds may include:
- Personal savings
- Loans from friends and family
- Small business loan
- Attract investors
- Bank overdrafts
- Community schemes
14. Choose a Suitable Location for your Business
Deciding on a suitable location for your renewable energy business should be one of your paramount decisions when starting the business. Any decision you make will have a direct effect on your operation cost as well as your ability to serve customers (and therefore your revenues).
Also, location decisions, once made, are difficult and costly to undo. A good location for your renewable energy business should be a visible well passed road where the business will be seen by many individuals who can easily pull into the lot and patronize your services.
Also know that location you choose needs to be legally acceptable for whatever you plan to do there. Indeed a place may be good for business, but if it is not zoned for what you plan to do, you are asking for trouble. You should never sign a lease without being sure you will be permitted to operate your business in that space.
Your city planning or zoning board determines what activities are permissible in a given location. If your zoning board has a problem with any of your business activities, and it is not willing to work out a way to accommodate your business, you may have to find another space.
15. Hire Employees for your Technical and Manpower Needs
Even though you don’t need a college degree to become a professional in the renewable energy industry, you will definitely need knowledge and passion to succeed. We suggest you research all aspects of the environmental state, national recycling and energy efficiency statistics, product evaluations and consumer needs for renewable sources. Look for business opportunities that include training programs, seminars and support.
A lot of renewable energy companies don’t survive long due to poor business habits or inferior products. Once you have narrowed your options for investment, affiliate participation or service agreements, then conduct a background check on the companies you are interested in working with.
Indeed renewable energy resources exist over wide geographical areas, in contrast to other energy sources, which are concentrated in a limited number of countries. Rapid deployment of renewable energy and energy efficiency is resulting in significant energy security, climate change mitigation, and economic benefits.
Though a lot of renewable energy projects are large-scale, renewable technologies are also suited to rural and remote areas and developing countries, where energy is often crucial in human development. Also note that your choice of manpower will depend on the niche and target customers you choose.
Safety equipment tops the list as the most important set of tools you will need in most niche you choose in this business. This collection includes a rope and harness, safety glasses, gloves, earplugs, boots, hard hats, etc. These items are known as personal protective equipment (PPE).
The Service Delivery Process of the Business
To succeed in this business, you need to learn how to strike a delicate equilibrium between competing interests. For instance, even though wind energy has grown spontaneously over the past two decades, the industry faces a constant struggle to balance the need to maximize the production of an asset to take advantage of the wind’s potential power, optimize the timing of needed maintenance to make sure that farms can function while the wind is blowing, and remain in compliance with increasingly complex regulatory requirements.
Indeed modern technology now allow companies to accurately forecast wind speeds and generation potential, the industry as a whole must still work around the availability of the wind to schedule maintenance and perform repairs, a problem not typically shared by traditional sources of energy generation.
When facing some of these business challenges, you need to have the ability to maximize your assets’ performance, improve communication between sites, and help develop a knowledge base of solutions to critical business issues. Below are four processes you can use to always stay one step ahead.
You need to learn how to determine which problems are the most critical to address and solve first.
You need to understand the best way to get what you want across, within and outside your staff. Your ability to create a straight chain of action and communication, the more chances you have to dominate in this industry.
- Knowledge Retention and Learning
Given the pace of advancement in renewable energy technology, you need to document maintenance techniques, technical solutions, and best practices in a useful way. With these processes in mind, you can build a lucrative business that will stand the taste of time.
16. Write a Marketing Plan Packed with ideas & Strategies
The need for renewable energy in our present age is becoming very obvious. This is because of the increasing concerns over global warming and a need to reduce energy costs and personal carbon emissions. Renewable energy has plenty to recommend it; it is a clean source of energy and technological advances has brought renewable energy systems well within financial reach of the average energy consumer.
That said, the statistics about interest in renewable energy might seem quite dubious to struggling renewable energy businesses. Your business plan is basically a handbook guiding you – and your investors – through each step of building your company. Include an executive summary, product information, operational procedures, financial aspects, goals and projections. Create a solid marketing strategy outlining your target consumer and how you plan to reach them – advertising, social media, sales calls and other avenues.
Building a solid customer base is very necessary in the renewable energy industry. The only way to get clients for your business is to go out and explain the benefits of your business and show potential customers pictures of different systems. Advertising does little beyond getting your name out, and energy systems get sold through personal interaction, not through a yellow pages ad.
Meeting potential customers can be done in a variety of different ways. You will be mostly marketing to the affluent in your community, so you need to figure out where these people spend their time and what activities they like to do. Maybe there is a home show in your area where you could set up a small table advertising your services. Or, you could visit some of the local clubs and pass out some brochures or sponsor an event. Other things to consider may include:
- Search for energy incentives available for your area. These incentives can make your renewable energy business cost effective for your prospective clients, and your familiarity with them will be an important factor in securing new business.
- Build connections with wholesale suppliers of equipment needed for the renewable energy niche you choose. Be sure to identify yourself as a contractor so that you get wholesale prices.
- If you choose to go into installation, you need to buy a truck or van large enough to handle the equipment you need to carry, or buy a fleet of trucks if you plan to start a large operation. You may be able to secure a business loan from a local bank or credit union to offset your initial start-up costs, which will also include buying the tools you need.
- Advertise your services in local newspapers and real estate magazines. Post flyers at local lumberyards and in supermarkets. Once your business starts, you will be able to cut back on advertising as more and more of your clients begin coming through referrals.
- Utilize social media. This is a must with any renewable energy business. By social media, we mean Facebook, Twitter, Myspace along with numerous others. You can open an account for free and then just post updates about what you are doing and the progress your business is making.
17. Develop Iron-clad Competitive Strategies to Help You Win
A lot of renewable entrepreneurs find themselves wondering, “Where are all the customers?” or “Why won’t my leads commit?” It is not that people aren’t interested in renewable energy, nor is there any argument against renewable energy legitimacy as an excellent alternative energy source. But the competition is gradually swallowing you up. Here are few strategies to win your business competitors.
- Show them the money
- Sell the Environmental Benefits of renewable energy
- Make it look easy
- Know Your Products
- Offer Referral Credits
- Be a thought leader in your space
18. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
When starting this business, you need to know that oil companies have spent billions of dollars over a one hundred year period to effectively brand their supposedly unique kind of fuel. Every time we pull into a gas station, we are making a subconscious decision to choose one brand over another, when the reality is that gas is gas. But Shell has ‘V Power’. The Renewable energy industry, by comparison, is still relatively new, and many companies are searching for their own brand awareness. Ways to get your own brand awareness may include…
- Research the customer’s mind set in each local market
- Nail your message
- Use valuable content to show your difference
- Be educative
- Ride the locavore movement
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