Renewable Energy Trading: What It Is and How Does It Work?

The renewable energy sector is expected to grow significantly in the coming years to address the climate impact with environmental, social, and governance considerations. The demand for cleaner energy is seen across various industries including shipping to work towards the goal of decarbonising energy and zero net emissions. 

This has opened newer opportunities in the energy trading landscape. With companies focusing on transitioning to alternative fuels, it is time you know more about renewable energy trading and how smart energy trading and risk management (ETRM) solutions can help you in securing profitable deals. 

So, let us start from the basics! 

What Is Renewable Energy Trading?

In contrast to conventional energy trading which involves crude and refined oil products, renewable energy trading involves the trading of renewables. Renewables are defined as resources that can be reused and will not get exhausted like fossil fuels as they are naturally replaceable. That basically means seamless and indefinite supply! Renewable energy includes solar, wind, and geothermal energy, biofuels as well as the renewable part of the waste. 

Renewable energy trading is gaining much interest and attention because this seems to be a new era of energy trading—reducing the reliance on coal and oil as sources of power or energy. 

Renewable Energy Trading Landscape

The demand for renewable energy is expected to increase as efforts are being made to reduce the consumption of conventional energy sources due to environmental impact. Moreover, governments across the globe are intensifying efforts in terms of financial incentives as well as tax benefits for industries and organisations that are driving the renewable energy sector.

This trend is evident from the fact that since the last decade renewable energy trading has grown significantly. According to a report, the renewable energy market is expected to reach $1,977.6 billion by 2030, with a CAGR of 8.4% between 2021 and 2030. Moreover, experts expect fierce competition among suppliers as the prices for renewable sources get more competitive. 

What Are The Pros of Renewable Energy Trading?

Let us understand the benefits. 

  • Predictable, high-returns: Traders and investors can expect long-term, predictable, and inflation-based returns from renewable energy trading. Plus, they can also get a direct monetary advantage from the increasing power prices. This underlines the high demand for cleaner and cheaper sources of energy that renewable energy offers.  

  • Diversification: Also, there is a low dependency on traditional assets which helps offer a hedge against inflation, giving the opportunity to traders to diversify their investment portfolio. 

  • Significant growth: The capital costs are declining in renewable energy trading. Moreover, the industry is expected to grow significantly with a CAGR of more than 8%. Experts believe that with stricter regulations and energy transition, it will in no time replace other energy commodities. 

What Are the Challenges? 

The trading and management of alternative fuels involve a complex supply chain, evolving global emission regulations, RINS and LCFS credit management, hedging of biofuel products as well as logistics and storage of multiple types of feedstock and materials. 

Importance of a Smart ETRM Solution

A smart, real-time renewable energy trading software can help you gain complete visibility and control over your operations. Since Inatech comes with a deep understanding of biofuels wholesale and retail supply chain, our specially designed ETRM solution for renewable energy, Inatech renewable fuels ETRM will help you streamline trading including credit products trading (RIN and LCFS), hedging, credit, inventory, and cash flows. 

It will also ensure leaner operations by handling different types of feedstocks and biofuel products, supply chains and cost structures across geographies. Additionally,  Inatech renewable fuels ETRM allows remote collaboration through processes and systems in a secure, and efficient manner.

To know more about how you can tap this new renewable energy opportunity with Inatech renewable fuels ETRM , speak to our expert today for a free demo!