CWEB.046/OCTOBER.28.1999
Call it what you will--education, marketing, information-sharing, propaganda--but by any name, spreading the message holds the key to expanding green power.
And despite its relatively small market share, retail green power numbers can be interpreted as encouraging, as can growing utility interest. But time, money and plenty of communications will be needed to build a substantial green power market--however green power is defined.
These messages came from a green power panel discussion at the Northwest Energy Coalition's Clean & Affordable Energy Conference Oct. 1 in Seattle. The panel featured two Northwesterners--moderator Rachel Shimshak of Renewable Northwest Project and Barrett Stambler of PacifiCorp--along with two Californians, Kirk Brown of the Center for Resource Solutions (which operates the Green-e certification program) and Joe Costello, consultant for the Center for Energy Efficiency and Renewable Technologies.
Spreading The Green Power Word
Shimshak's questions on the discrepancy between customer surveys supporting green power and actual market response, and on the most important factor influencing people to opt for green power, both elicited public communication as a decisive ingredient.
"The most important step is education," said Costello, whose organization is working to inform Californians they have choices on electricity supply, including green options.
That's a challenge, he acknowledged, given the widespread public apathy on energy and electricity. He cited polls showing fewer than 2 percent of California residents are aware they can buy renewable energy, and 65 percent know little or nothing about their choice in power supply. "That's the very big hurdle," Costello said. "Every time we do talk to people and explain what's going on, they are very supportive." Toyota Motor Sales, Patagonia, Fetzer Vineyards and the city governments of Santa Monica and Chula Vista have all chosen 100-percent green power supplies, and these can serve as exemplars.
Brown and Stambler agreed on the importance of spreading the green power word, and doing so continuously, not just once or twice. As in marketing any product, Stambler said, "People have to be hit with something eight to 10 times."
Brown emphasized the connection between energy and environment--"Producing electricity is one of the most destructive things we do as people," he said--as a means to promote green power. "People are going to rally to our cause" if they understand this link.
Stambler downplayed green power survey data, explaining that surveys chronically inflate positive responses, regardless of the queried product. "People have a tendency to say what they think the person surveying wants to hear." He also advocated patience for green power advocates. AT&T, he noted, had 100 percent of the long-distance telephone market 20 years ago, and 66 percent 10 years later. Now it's around 50 percent. "MCI is about 20 percent of the market, after about 20 years and billions of dollars of marketing."
In PacifiCorp's 1998 pilot direct-access program in Klamath Falls, Stambler reported, 8 percent of eligible customers chose to switch to one of three options, and of those, 28 percent selected a green power product combining 80-percent geothermal and 20-percent wind, priced at a $10 monthly premium.
This happened despite a short 30-day decision period, no direct PacifiCorp marketing of any specific product, and in an area not considered a bastion of environmentalism. "I was concerned it would backfire and hurt our efforts to do more green power," said Stambler, but PacifiCorp officials were "shocked" by the reasonably robust numbers of switchers. "I think our expectations are way too high, that you're going to get 50 percent of the people to switch in 30 days. You've got to be realistic how markets work."
Utilities such as PacifiCorp are discerning real business potential in green power. "I am actually startled at the amount of interest and change that is occurring in the utility business around green," he said, citing utility research studies that green business will be a multibillion-dollar industry in the U.S. within the next 10 years. "I think it's reason for optimism."
Marketing Questions
NWEC's Steve Weiss wondered why retail should be the favored means to promote green power, compared with wholesale. "It's way more costly," he said.
Costello considered marketing a positive feature for green power, as it creates a more "educated public" that can advance renewable energy in political and regulatory forums.
Stambler brought up restructured Pennsylvania, where some green power marketers can beat the utility benchmark rate of 5 cents to 6 cents per kilowatt-hour. And even when green power products cost more, marketers are capturing customers. "People are willing to pay more for green," according to Stambler.
What about marketing to sympathetic niche audiences such as environmental groups? Sheryl Carter of the Natural Resources Defense Council reported that her organization identified environmentally preferred power products available in California, and sent information on them to NRDC's 80,000-plus Golden State members. But NRDC, being a non-profit group, isn't able to aggregate its members for green power purchases.
NWEC's Nancy Hirsh noted that in Montana, which opened to retail competition in 1998, "Not a single marketer has approached that market and there's no education being done, nobody trying to get anybody to switch." Does the marketer precede the educated consumer or vice versa, she wondered?
"The market may not be big enough to get in in an aggressive way," acknowledged Brown. Montana does have 2.4 percent of electric revenues earmarked partially for renewables, Stambler noted.
Asked about green power success stories, Stambler cited Public Service Co. of Colorado's green pricing program, in which customers can buy 100-KWh blocks of wind power for a $2.50 monthly premium. (More than 14,500 customers have signed up since 1997, including more than 250 businesses, PSCo reports on its Web site). Stambler praised this initiative as simple, understandable, easily marketed and directly connected to new wind turbine installations. "I do think customers are differentiating between products with new renewables and not," he said.
The Green-e certification program requires at least 50-percent renewables content for qualifying products, Brown said, with any non-renewables required to be "as clean or cleaner than the system mix. We're seeing marketers move towards 100-percent renewables, and also seeing them aggressively moving away from using any coal or nuclear power." In addition, he noted, "We haven't seen marketers touting nukes as emissions-free."
Stambler began his renewables career in 1979 as a solar lobbyist in Washington, D.C., where he testified in favor of PURPA (Public Utility Regulatory Policies Act) legislation that unleashed the independent power industry. He later worked for the now-bankrupt Kenetech Windpower, seeking to develop what he called "the lowest-cost [renewable] widget. After that I said, 'What's left?' We tried to do it in a regulated environment and we can talk about nice little victories . . . On the scheme of things we have not made a huge impact on the renewable resource front." But the dawn of customer choice, he indicated, represents a whole new opportunity.--Mark Ohrenschall
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