This post was written by TechRepublic member Jason Shepard (aka SkyWlf77).

For quite some time, I’ve been an active supporter of companies that have made the decision to use, at least in part, alternative energy as part of their business plan. I see them as models for future generations. But all too often, I run into business owners who have no understanding of what alternative energy is all about, or they think that the only benefit to using alternative energy solutions is a reduction in the electric bill each month.

I hope to clear up some of this confusion and answer three basic questions about alternative energy: What is it? What does it cost? And what are the benefits?

What is alternative energy?

According to the Free Online Dictionary, alternative energy is “energy derived from sources that do not use up natural resources or harm the environment.”

Here are the most common sources of alternative energy for businesses:

  • Solar power is any system that captures light energy from the sun’s rays and converts it into electricity, such as solar panels on the roofs of homes and businesses.
  • Wind power is any system that converts wind energy into electricity, including the large, 3-bladed wind turbines seen in many open areas.
  • Geothermal power is power extracted from heat stored in the Earth. In small-scale environments, such as individual businesses, geothermal power is not generally used to produce electricity. Instead, it’s used to heat and cool the buildings that businesses use. The most common form of geothermal power is heat pumps.
  • Hydroelectric power is the production of electrical power by using the force of falling or flowing water, such as a small waterwheel positioned within the flow of a stream or small waterfall.

Which of these you use depends on many factors, including – but not limited to – the budget available, the location of the business, the room available for the installation, and the average amount of power used by the business each month.

Of course, there are other forms of alternative energy production, but they are either not suitable for small-scale projects, not considered good examples of clean energy, or are still in their early development without sufficient data.

What does alternative energy cost?

The answer to this question varies widely, but there are some general guidelines that we can go by, such as the initial investment – or capital expenditure– and the cost to receive power from the system.

The figures represented here are based on the total kilowatt peak output (kWp) that the particular systems are designed to produce and the cost per kilowatt hour (kWh) of their production.

  • Solar photovoltaic: $6,000-$10,000 installed per kWp; $.22-$.40 per kWh
  • Wind power: $1500-$3000 installed per kWp; $.08 per kWh
  • Hydroelectric power: $1500-$5000 installed per kWp; Variable cost per kWh
  • Standard power supplied by grid: Limited or no installation cost; $.08 per kWh (provided for comparison purposes)

Geothermal is a bit different since it isn’t used in small-scale operations to produce electricity. Instead, it’s generally used to heat and cool buildings. Heat pump systems are based on the square footage of the area to be heated and cooled, as well as the location of the building, and therefore vary drastically.

A geothermal heat pump system designed for approximately 4,000 square feet can cost between $10,000 and $25,000 – or possibly even more, depending on the depth and length of pipes required, options chosen, and soil conditions in your location. Overall, geothermal heating and cooling can provide a 40-70% annual savings.

Maintenance is another cost consideration and it varies wildly, even between systems of the same type. However, as the technology matures for each of these systems, reliability increases and maintenance costs are reduced.

  • There is a general consensus that hydro power systems are usually the most economical to operate. In fact, some hydro power systems are almost maintenance-free.
  • Solar photovoltaic power systems are the next cheapest to maintain, as they typically have easy access and very few moving parts.
  • Wind power systems are quite often very tall and large and require special equipment to access, which can significantly impact maintenance costs.
  • Geothermal power systems can also be quite costly to maintain, because the components are buried deep in the Earth and make excavation necessary during a replacement procedure.

The final consideration of the costs involved with alternative energy solutions is the possible roadblocks involved in their implementation. Many of these require special permits, which can be costly and difficult (or even impossible in some areas) to obtain.

Certain locations do not lend themselves easily to the implementation of alternative energy solutions. Try putting solar photovoltaic in northern Canada or wind power in a canyon, and you’ll quickly find out that not much energy will be produced by either system.

There is also controversy surrounding the implementation of some of these solutions. For example, wind turbines have a perceived penchant for killing birds in flight, even though studies haven’t proven that this happens significantly more than other risk factors.

Solar photovoltaic power systems have been criticized because of their tendency to confuse insects, which lay their eggs on the panels – and then the eggs are baked to a crisp. Fortunately, improvements in the design of these systems (including white strips built into the solar panels) have reduced this effect to nearly zero. However, you should still examine these considerations to determine your own personal feelings before implementing one of these solutions.

What can alternative energy do for my business?

Businesses that currently use this technology have discovered that the reduction in the monthly power bill can be quite large when the design capabilities are carefully considered and the correct systems are implemented.

Savings are directly proportional to the initial investment – the larger the system used, the larger the savings will be. It is actually possible for a business to design and implement alternative energy solutions that can completely eliminate their dependence on retail energy.

While saving on energy cost is a large part of why many people and businesses decide to implement these solutions, it is most certainly not the only consideration. In today’s society, we are becoming more concerned with the overall effect of everything we do on the environment. The biggest factor here is a company’s carbon footprint, or the total amount of greenhouse gas emissions produced by the business.

Greenhouse gases are directly responsible for the depletion of our ozone layer. Implementing alternative energy solutions is one way to reduce or offset a company’s carbon footprint. It can also lessen the need for a business to buy carbon credits, which is a significant cost savings.

Clean alternative energy solutions also produce very little or no waste byproducts, unlike traditional energy sources. Therefore, using these solutions helps reduce pollution. Plans are already being made to institute clean energy requirements in the future. Alternative energy solutions will help businesses meet those requirements, and implementing them now will help future-proof the business.

Realistically, the entire process of planning through implementation takes time. Early implementation also allows plenty of time for this process to be completed, thus lowering the overall cost. If you wait and have limited time to meet the new requirements, the cost increases.

In addition to these benefits, many people supporting businesses with known eco-friendly reputations. These businesses are seeing an increase in their annual sales and have determined that the cause of this, in large part, is due to their policy of environmentally-friendly energy production.

Yet another benefit of these energy solutions is the capability of a business to continue operating, even during a power outage when most of their competitors are in the dark. They may not be able to operate at full capacity – but even at partial capacity, sales are made, products are produced, and income is still generated. This can give a business a huge advantage over their less-prepared competition.

The cost-to-benefit analysis is a major factor in each company’s decision process on whether or not alternative energy production should be a serious consideration. With the costs dropping annually and the benefits becoming a larger part of the big picture, many businesses are finding that alternative energy solutions are well worth the investment.

The larger the company, the more alternative energy will impact an overall business plan, but even small mom-and-pop style businesses are beginning to take a closer look at the implementation of these solutions.

I hope that some of the information I’ve provided here has been helpful. Of course, there are many excellent sources of more-detailed information about alternative energy available, and I encourage you to examine the pros and cons of all of the viable solutions for your business.