Sierra Nevada Brewing Co.: End of Incentives

Case Solution

Tara Ceranic, Ivan Montiel, Wendy S Cook
North American Case Research Association (NACRA) ()

Ken Grossman walked into Bill Bales’ office hoping to find an answer. Grossman, the owner of the Sierra Nevada Brewing Company, reflected on the new reality he was facing and raised the dilemma with Bales, his chief financial officer. Grossman was committed to environmental sustainability, the main cultural norm of his organization. Originally, the decision to install the five-phase solar system was made with the expectation that California would offer tax incentives that would save the company a significant amount of money on installation. Grossman had received word that the company had hit the California state “cap,” which meant they would no longer receive subsidies for green electricity rates. Since a phase of the installation is still pending, Ken asked if the money could go elsewhere. The above incentives meant that its environmental investments always paid off fairly quickly, allowing the company to aggressively pursue its commitment to preserving the natural environment. But what should I do now? Completion of the solar system would be expensive. Payback time has more than doubled from seven to fifteen years without incentives from the state of California. It appears that the brewery was light years away from industry standards and had installed most of the equipment.

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